This far into 2022, there’s still no end to the supply chain disruptions that continue to plague the electronics manufacturing sector.
Semiconductor and computer chips — the heart of any electronics device — are rapidly growing in demand. Unsurprisingly, manufacturers offering PCB assembly (PCBA) are feeling the impact of the sparse supply of semiconductors, which, in turn, is affecting many industries, especially the automotive industry.
Any company that needs electronics design as part of their product development process will have been affected by the global chip shortages — and EMS is no exception.
So, what was the catalyst for these extreme delays?
Manufacturers have faced continued challenges with acquiring and maintaining their stock — triggered by the COVID-19 pandemic and compounded by Brexit disruption and ongoing geopolitical tensions. Supply lead times for electronics components increased pre-COVID before the pandemic exasperated the issue as the world went into lockdown. Everything related to the supply chain was impacted, from manufacturing to freight and logistics.
The industry assumed the effect of COVID-19 would lead to a drop in demand for components — who could have predicted the surge in demand for electronic consumer items by those furloughed, in isolation or working from home?
It’s no surprise that increased prices and lead times have impacted businesses and customers worldwide as stock dries up and the pressure grows. Now, the surge in demand is exceeding the ability to supply, with many companies unable to fulfil their customers’ requirements.
As many electronic parts are non-returnable and non-cancellable, suppliers are pressing for orders ahead of next year’s deadline to fix allocations. Having a reserve of components offers more flexibility — ordering parts as and when they’re needed can have manufacturers waiting for over 12 months.
Of course, there’s a balance of risks to be considered. Early purchasing of supply gambles that the parts could ultimately be unsuitable and have to be scrapped or potentially sold on. In this case, however, manufacturers aren’t afforded the luxury of testing the waters. After meticulous inventory checks and optimal forecasting, it may be safer to commit to the project and order parts in advance.
With the ongoing supply chain crisis affecting companies worldwide, many customers have come to understand that, unfortunately, these delays are out of our hands. At EMS, we’ve been doing everything we can to alleviate our customers’ wait times and manage their expectations…
From quick redesigns to readily available parts and broker stocks, we’ve largely been able to mitigate problems — working together with customers to secure advanced payments for agreed components.
Many manufacturers use aged components or source parts via component brokers to reduce lead times. Component brokers operate in the ‘grey market’ and specialise in sourcing parts in low supply, meaning many manufacturers often turn to them in a punt to reduce their lead times. Although this is an accessible short-term solution to bringing down lead times, ensuring you’ve got a trusted supply chain is crucial. We aim to buy all components from registered distributors to provide complete traceability if needed.
For us, transparency and trust are essential. Several of EMS’ customers have asked us to purchase from particular websites or companies claiming to have stock of specific components unavailable anywhere else. However, we’ve built a portfolio of reliable contacts within the manufacturing community who we’ve worked with for years. These companies will only purchase from suppliers offering full traceability and date codes.
Business as usual in the electronics industry may be a while off yet. As semiconductor manufacturers struggle to keep up with demand, short and long-term strategies must be considered to weather the supply chain disruption as successfully as possible.
EMS is dedicated to quality, so customers never have to worry about their products being affected by the strain of the supply chain crisis. You can view our statement on the use of aged components to find out more about our internal guidance for commercial use — whilst the market demand for a component might change, the risk from using an aged component doesn’t.
We understand these are difficult times for the electronics manufacturing industry and our customers. Don’t hesitate to get in touch to see how we can help with your next project.