Since 2020, many manufacturers have eyed their inventory system with distrust, wondering when and where the next snag will happen. We’re not mind-readers, but chances are the internal dialogue looks like this: “Of my many electronic component supply chain issues, which straw will break my camel’s back?”
With more competition than ever for critical components, it’s time to act – or be left waiting at the shore. See if you’re facing any of these seven signs a logistics rebuild is necessary, then glimpse into your future if you do undertake an overhaul:
Any decisions a manufacturer makes to its network tends to be considered and deliberate. Even small changes can have ripple effects on production speed and cost.
What might lead to a purchasing team restructuring its internal sourcing system, hiring a distribution partner, or swapping its current partner?
Electronic component shortages are stretching into 2023 and beyond because of COVID, political strife, and sourcing competition from consumer and smart electronics. Industrial manufacturers’ cable orders are currently 8 months behind, while other supplies are in even worse shape.
If this is your #1 reason for seeking distributor help (and for many OEMs it is), don’t wait until the ship’s sinking to reach out. Even the best electronic component procurement companies can’t fix a broken chain overnight.
When market forecasters smell blood, the sharks of the supply sea pounce.
Materials such as copper are running low due to overconsumption, and most large manufacturers are aware of this. Thus they buy 10x the supply they currently need for important copper-based components … leaving mere scraps for the little guys.
Likewise, even the world’s best electronic component supplier isn’t invincible.
Thanks to COVID wrecking lead times as we know them, many customers are no longer comfortable relying on a single source for each component. Those customers are correct – it’s no longer safe to count on one stream for key components, and probably won’t be anytime soon. If you’re falling behind because you don’t have a plan B or C, it’s time to bulk up your investment in electronic component sourcing.
Struggling teams are questioning whether the engineering team really needs that high-demand part when a less pricey, more readily available alternative may suffice. Meanwhile, purchasing managers are exploring more cost-efficient ways to buy and manage electronic component inventory.
If your setup involves direct buys from manufacturers, you’re probably paying even more for these parts (unless you’re a huge company that buys in bulk).
When a buyer wants to switch to a new component line, there’s no guarantee its distributor will make it available. If the change isn’t profitable for the supplier, it may say goodbye.
You’ll have to decide which is worth more – your current distributor or that new component line.
Sometimes it dawns on buyers that their existing DIY setup or distributor agreement only gets half the job done. Many manufacturers prefer to tap into supplier-distributor networks that also offer:
To paraphrase an old saying: You don’t remember exactly what people do or what they say, but you always remember how they made you feel.
Trust your initial gut reaction. Don’t let yourself get used to any of these soul-sucking situations:
Being a senior or manager at an industrial OEM is tough. Filling gaps, juggling projects and parts and suppliers, being expected to possess oracle powers – it’s a lot. If your setup or suppliers make you feel ignored, on edge, or on the backburner, it’s probably time for a change.
If you’re still reading, you’re probably ready to make a change, or at least talk a potential one over with your peers. One question the boss often brings up: Can we deal with this in-house?
The in-house approach – especially the “buying directly from suppliers” part – can go awry for a variety of reasons:
The best electronic component supplier networks are a source of not just components, but efficiency too. If you aren’t getting the following benefits in-house, or your current distributor isn’t offering them, get a new distributor!
Of course, you’ll only realize these benefits if you find the distributor that works for you. Use this checklist when you talk to a distributor about a partnership:
If you’re experiencing multiple warning signs above, don’t wait for your poor camel to break down. Take these omens seriously, and don’t assume “things will rebound soon because COVID’s over.”
Yes, electronics supply chain management is about jumping on deals and opportunities, but it’s also about knowing when to jump ship (or camel) when the current path is dangerous. If a more robust system isn’t possible inside your company, look outside for a distributor with a healthy network and reputation.
For more tips on optimizing your operational efficiency, see our other blog resources: