4-Star Electronics’ director of operations, Scott McKee, suggests a strong relationship with a reputable independent distributor is a prudent choice.
Events of the past year, combined with already high demand for components, have caused severe shortages in the electronics manufacturing supply chain. Poor weather, natural disasters, political unrest and the pandemic have thrown formidable challenges at the manufacturing industry and its customers. Component prices have increased and if you can find a part, lead times have lengthened by weeks or months. Deliveries are sometimes scheduling up to one year after order placement.
Before the pandemic, component demand was already rising. Specific industries were on massive growth curves, such as smartphones, portable devices, IoT and automotive. The pandemic added problems for the medical industry, as manufacturers began or increased production of ventilators, diagnostic tools and other medical devices.
Meanwhile, the pandemic itself caused massive component shortages as it spread around the world, with plant closures and shipping disruptions.
As parts of the supply chain shifted to support healthcare, other industries began experiencing shortages, none more so than automotive which is facing billions of dollars in losses. Already struggling with declining sales and increasing costs, automotive manufacturing, so reliant upon just-in-time delivery, was devastated by supply chain disruptions. Estimates suggest over 600,000 vehicles were cut from production in Q1 2021 alone.
The seismic waves of this supply chain disruption are being absorbed by an army of brokers, procurement services and independent distributors, who are working hard to manage an influx of requests for compatible components. These options may be your answer but, for those considering this route, there are things to consider first.
Quality independent distributors have already amassed the resources, contacts and experience necessary to quickly find alternative and acceptable solutions. They know how to source hard-to-find and obsolete components, which gives them an upper hand. They typically have a good pulse on the market, know who has surplus product, and know who has shortages so they can move components to where they’re needed most. In most cases, they can get what a customer needs faster than their normal supply chain. The very best independent distributors also have in-house labs, where they can inspect and test components to ensure authenticity and functionality.
However, there are dangers if a customer does not choose a reputable or knowledgeable distributor. Nothing brings out counterfeiters like a good parts shortage. They are ready to unload convincing, yet nonfunctional, even dangerous, product on unsuspecting buyers. If you are not careful in your choices, you could get burned. This is especially important for companies dealing with high reliability components. A common method of counterfeiting is to re-mark lower performance commercial grade parts as industrial, automotive or military/aerospace grade, which can cause significant problems.
Supply chain uncertainties may seem daunting but they are also temporary. Industry will adapt, alternative solutions will be found, normalcy will return. In the meantime, developing a strong relationship with a reputable independent distributor is a prudent choice. It may be key to finding solutions that offer competitive advantage, while minimizing risks amidst a sea of fake components. Such a relationship could pay dividends in the future, pandemic or not.