Electronics

Navigate the stormy sea

Smith’s President of the Americas, Todd Burke

As the parts purchasing department continues to face procurement headwinds, independent distributors provide solutions to access previously undeveloped supply lines.

Purchasing professionals have faced challenges over the last 12 months, as long lead times, obsolescence, and limited component availability all affect the supply chain. In 2021, we saw a proliferation of technologies, including 5G, electric vehicles, medical and consumer products. Combined with the rise in global electrification, component manufacturers are naturally struggling to meet demand. In some cases, orders are increasing, facing lead times of over 92 weeks.

John Neuffer, CEO of the Semiconductor Industry Association, reported that global semiconductor sales in November 2021 were $ 49.7 billion, an increase of 23.5% compared to $ 40.2 billion in November 2020. By November 2021, the cumulative annual total of semiconductors sold reached 1.05 trillion, the highest annual total in the industry.

Increased shipping costs, inflation, reduced inventories, and pandemic hiring difficulties are mixed, enough to give buyers a sleepless night.

The IPC’s January 2022 Economic Outlook Report found that component shortages continued to impede production levels, lead times were long, and supply chain challenges continued into 2022 and, in some cases, until 2023.

Luke Lesaffre, Chief Revenue Officer at Fusion Worldwide, said:

“Business is showing no signs of slowdown. There are no signs of a change in supply and demand this year. As a result, buyers continue to look to independent distributors for chips and other components. We have All the signs are that these current supply conditions will continue throughout the year until 2023. “

One of the reasons independent distributors saw a surge in demand was that more and more electrical device buyers entered the open market for the first time due to a shortage, partly due to a pandemic.

Todd Burke, President of the Americas, Smith, said: Smith has worked tirelessly to support its customers throughout the shortage situation, shipping over 30,000 unique manufacturer part numbers and increasing IC sales by more than 1,000% in 2021. rice field.

“Demand for semiconductors and other electronic components has not slowed, and supply shortages are widening around the world. Independent distributors like Smith can sell and procure components in the open market for electronics. We are unique in our supply chain and offer many perspectives from a wide range of customers in all industries.

“Smith provides partners around the world with unique support, including: Leverage sensitive market data and analytics to diversify and enhance our procurement channels through in-house quality control and testing. Leverage decades of industry expertise to solve complex supply chain challenges.

“Data analysis, quality control, and industry expertise are important criteria that purchasing professionals need to consider when assessing open market distribution partners. These resources allow buyers to navigate the open market well. And help you to procure products more strategically and keep your line active. As the world’s leading independent distributor of electronic components, we partner with our partners in the current market turmoil and subsequent turmoil. We are proud to provide you with the essential tools you need to keep their line up and running. Become a global partner with flexible custom solutions that can continue to build long-term relationships and complement any market situation. We will provide it. “

A2 Global CEO, Frank Cavalaro

Obsolescence management strategies, especially for the aerospace and defense sectors, are another challenge that buyers face.

Frank Cavallaro, CEO of A2Global, shared a strategy designed to help with long-term planning, informed decision making, and avoidance of redesign. .. While the US Department of Defense (DoD) is trying to extend the life of weapons systems, rapid technological advances are allowing suppliers to abandon older, less-demanded technology products at a faster pace. This means that the components used in military systems have become obsolete before the end of the product life cycle, making it increasingly difficult to find replacement parts.

“It’s an important consideration when planning a decommissioning strategy, as it’s commonly known as Manufacturing Source and Material Shortage Reduction (DMSMS). As the life cycle of components diminishes, defense and aerospace manufacturers are the final product. There are only a limited number of options left to ensure that it works.

“There are three strategies that manufacturers need to consider ahead of component obsolescence. Develop strategies for obsolescence during the design phase. Leverage supply chain networks to meet appropriate inventory needs. Plan for storage. Expand your supply channels and vendors by considering specific parts.

“Regression management is a complex issue for defense and aerospace, and DMSMS makes it even more difficult. With a powerful regression management system, you can plan, make informed decisions quickly, and make informed decisions. You can avoid redesigns and fines. “

Scott McKee, Operations Director at 4 Star Electronics, said: Helps procure materials from the open market when other options are not available and provides value with in-depth purchase support. Leading independent distributors carry out advanced processes for bill of materials and lifecycle analysis, vendor management, kitting, and complete purchase outsourcing.

“Most quality independent distributors have developed a comprehensive inventory control program that can identify the source of materials, which has components in addition to years of experience dealing with counterfeit and obsolete components. It’s the result of understanding how to get a component from someone who needs it to someone who needs it.

“Independent distributors can have many sources, including excess or excess OEM inventory, OCM direct purchases, authorized distributors, and multiple open market inventory sources, but buyers are open market. You need to use some discretion when procuring from. There are two reasons for this. It can be difficult and expensive to manage a large number of vendors thoroughly, and the impact of the shortage. If the source of old parts that have been received is limited, using a large number of brokers or independent sources tends to increase the cost of the component. “

ESNA tells Sensible Micro Corporation President and Co-Founder Chris Torrioni how component purchasing professionals can work with independent distributors to unlock maximum value from independent channels in the current market turmoil. Asked for insights.

Chris said: “First, we visit an independent supplier to perform a site audit. There are many independent distributors in the industry, but we educate them to properly mitigate the risk of getting new original parts. Only a few of the actual investments required for training, certification, and inspection functions have been made. It is possible to delve into the quality control systems of independent companies and understand how they manage their suppliers and inspection processes. It is important.

“Next, make sure you have a transparent and trustworthy relationship with the person who handles your account on a daily basis. Time is important and purchasing professionals in this global shortage market. Needs quick and accurate information to make important decisions. Slow communication or lack of important product information can be frustrating and miss many opportunities to protect materials.

“Google is no substitute for performing due diligence on new suppliers. If you haven’t established a relationship, don’t pay in advance. In advance to the company that claims to have the parts at Google. Wired to, but never delivered substandard / counterfeit, so we don’t know how many times we have acquired new customers. The emotional reaction to finally finding the parts we need is believable to buyers. It can overshadow the logic of following a diligent procurement plan that may expose you to unprecedented levels of risk.

“Finally, don’t send the missing RFQ to every independent you know. Often there are 10 independents who have their inventory pockets freed and are tracking the same inventory. Anyone who has that inventory believes they have the hottest part of the market and prices will skyrocket. Experience and quality to effectively handle the business Make sure it works properly with two or three IDs with infrastructure. If they can’t find the material you need, then it’s legally available on the market. May not be in stock. “

In conclusion, Matthew Amato, Global Marketing and PR Manager at IBS Electronics, said: Time to market. Interestingly, in the last two years, the topic of supply chains has become very common people who have little understanding of what supply chains are, and now they know about supply chains.
“Material prices and lead times, from semiconductors to indirect materials needed to manufacture electronic devices, continue to skyrocket, with executives focused on the supply chain.

“The Oden Technologies 2021 State of Manufacturing report shows that supply chains are a priority for most manufacturing executives. Survey respondents said 71% redesigned their supply chains and 58% expanded their supply chains. On the other hand, the biggest challenges are related to new supplier certification (67%) and onboarding (57%).

“More than ever, manufacturers reinvent the supply chain with a multi-source strategy, design alternative components to overcome allocation challenges, and engage with independent distributors to increase supply chain flexibility and stability. It’s time to consider building a.
“Independent distributors such as the IBS Electronics Group with ISO: 9001, AS9120B and AS6081 certified quality management systems provide access to a seamless global network that unleashes a strong global market and enhances supply chain complexity. It can effectively adapt to market conditions to mitigate, which allows manufacturers to essentially source the entire bill of materials from a network of suppliers provided by a single certified source. The distribution model has greatly assisted manufacturers in overcoming the biggest challenge of accrediting and onboarding multiple suppliers limited by a limited product portfolio or region.

“There are three qualifications offered by the most effective independent distributors. Certified quality management system. Value engineering for deploying pin-to-pin alternative components. Global presence for optimal supply chain efficiency.”

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