Manufacturing: $260,000. Telecommunications: $2 million. The energy industry: $2.5 million.
Those industry averages aren’t CEO salaries or advertising budgets. They’re average costs of 1 hour of downtime, almost all of it unplanned.
If you’re new to those stats and know downtime is rampant at your company, don’t worry: Now the healing can begin.
In the electronics manufacturing industry, a lot of troubleshooting guides for unplanned downtime focus on asset failure. That’s a huge cost factor in downtime, don’t let your supply chain off the hook just yet. It’s easy to blame the world (COVID, war) for everyone’s sourcing problems, but many supply-related causes of downtime in manufacturing are preventable.
Let’s look at five sources – internally, on the distribution side, and on the component maker’s side – where costs may be piling up at your feet.
Again, we’re focusing on unplanned downtime costs that come directly from your company’s component supply chain issues:
Whether for your internal operation or the product you’re manufacturing, the inventory, spare parts, and other resources for the job must be available. ASAP. Waiting for parts to arrive can halt production, leading to costly delays and missed deadlines.
More than ever, it’s difficult to source reactively rather than forecast your needs. Especially in the case of high-demand or specialized components, you're setting up your production line for interruptions.
Is your team equipped to handle spikes in demand? A key employee on an extended absence could cause the sourcing team itself to become the source of slowdown, especially in smaller operations. Even at full staffing, a team’s inability to scale output on short notice could put the whole operation on ice.
There are two ways to improve sourcing consistency: by diversifying your supplier list and working through a distributor.
When an unforeseen problem occurs and your eggs are all in one supplier basket, production comes to a standstill. A supply chain with two or more suppliers means one vendor’s shortage is less likely to shut down your operation.
It’s also wise to give distributed sourcing a try. A distributor is more equipped to handle electronic component shortages than a single company. It has a dedicated staff with the bandwidth to:
Without a well-organized system for tracking and replenishing stock, you risk running out of essential components, which can bring your production line to a standstill.
Inefficient warehousing can exacerbate this issue. Poor arrangement, labeling, and tracking can lead to various shades of bad for your production schedule:
Luckily, this might be the most fixable cost of downtime in manufacturing. A little improvement in material handling can reduce machine downtime dramatically!
You don’t know what you don’t know.
Sometimes, unnecessary downtime occurs simply due to a lack of expertise in component function, quality, and material makeup. Waiting for a specific part to arrive for 11 weeks is a waste when a similar, more readily available replacement could be there in 11 days.
If your part is obscure or in high demand, you might be shooting yourself in the foot by being adamant about its inclusion.
First off: Stick to common parts and materials when at all possible. If you follow the other tips we’re sharing, you’ll be more prepared to snag popular parts before they run dry.
If you value design consulting at the assembly and production levels, you may also benefit from an outside expert at the component level. Some electronics distributors double as turnkey manufacturers, meaning they understand the components they’re selling to you – they’ve probably used them themselves.
Get a pair of expert eyes on your product to see if a substitute part can serve the same function without compromising quality. A real whiz might even be able to design the component out of your assembly entirely.
Everyone and their brother can set up a website and sell components online these days. And there are “vendors” in Asia who literally make their living by scraping components off electronics that were dumped in landfills.
Overly relying on a “cheapest possible” strategy, or buying from the gray market, is asking for trouble. Introducing bad parts into your system is less “shortcut” and more “short-sighted” (or “short-circuit”).
A bad part could delay launch due to poor results in production. An even-worse part could end with you mass-recalling launched products because they’re endangering the public.
The costs associated with recalls and rework go beyond just the financial aspect; they also include the time and resources spent on identifying and rectifying the issue.
Even if you use a reliable offshore vendor, you’ll still deal with longer freight waits (with more potential for shipping damage and saltwater corrosion). Communication barriers and weather events can tack on further delays.
Stick to reputable manufacturers who ensure nothing bad enters your assembly. Paying a few more bucks up-front is better than halting production later.
Your distributor can’t really identify bad parts during fulfillment, but it can at least source from manufacturers known for high-quality stuff that avoids banned materials. And an onshore component distributor will deliver your parts more quickly and smoothly.
... Speaking of which!
Even after COVID, there are still some supply chains that rely on a single source for products and parts. This keeps costs down when all is going well, but in times of supply turmoil it exacerbates the condition.
Even if you rely on a distributor, one with a limited supplier network can be a significant bottleneck in your manufacturing process. If the distributor can't meet your component needs due to a lack of variety or stock, your operation will have to scramble for support elsewhere.
There are plenty of bright-red flags to watch for when determining the reliability of a distributor or supplier:
Choosing a distributor with a broad and respected supplier network (in the 100s) is vital for maintaining consistent production in any decent-sized business. It’s one of the first questions you should ask an electronics distributor when considering a partnership.
Such a company will add value to your operation by leveraging its powerful network and offering responsive customer service.
Downtime is both a symptom and a cause.
It’s a symptom of poor inventory management, outsourcing, and partnerships. And it’s a disease in itself because it wastes employee hours, damages your brand, and strains your team.
Can you afford to lose $260,000? $2.6 million? If not, take stock of your current inventory, distribution, and supplier set. Consider whether a change in process (perhaps through outsourcing) is a better way of doing business. By realigning the supply chain at all links, you can maintain a healthier, more sustainable production rate.
For more tips on electronics sourcing, visit our resource center: