Forward forecast but don’t over-order

Anglia Components’ CEO, Steve Rawlins, suggests medical customers need to be transparent and realistic to weather the supply chain storm

Medical and healthcare markets are booming, driven by the pandemic. However, the ability to fulfil this demand is constrained by the same supply chain issues impacting the whole industry. In fact, these shortages have even become a hot discussion topic in the papers and on the news. This is a first and we aren’t even in the eye of the storm. Lead-times are out to 30-weeks and lengthening. 

Most suppliers will try to reduce those times for medical applications. However, we’re still talking 20-weeks rather than the 12 or so customers are used to. Anglia traditionally takes a strong inventory position and, working with its suppliers, tries its very best to support medical customers, especially those supplying ventilators and other patient-connected systems. Despite this, the picture is not much different for them. Although for wearables it is sometimes possible to substitute an equivalent device, for patient-connected systems that require qualification and regulatory approval this is rarely a realistic option. We recommend customers extend lead-times on their ERP systems and forecast at least six months ahead. Essentially, we need to know now what you’re going to build in January 2022. 

At the same time, we are cautioning customers against double booking and multi-sourcing. Be realistic about what you need and when. Stock and forward orders only go so far and we do our very best to keep our customers’ production lines turning. Placing multiple orders with several distributors can be counter-productive. Franchised distributors have to report their point of sale to the supplier, so multi-sourcing from several distributors will be apparent. The supplier may assume that you’re double or treble ordering and put you at the back of the queue.

They say that every storm passes and that applies to supply chains. Nevertheless, it is important to be realistic. I can’t see this particular rough spell clearing, or even slackening, any time soon. Suppliers are adding additional capacity but this takes time and demand in high volume markets like automotive, telecoms and consumer will rapidly mop it up. 

The opportunity for medical and healthcare customers is fantastic at the moment. There is still a great need for ventilators and other patient-connected systems, plus air quality monitoring systems as offices and retailers reopen. Telemedicine is also exploding, as medical professionals move to diagnose and treat remotely to limit their patients and their own exposure to the virus. The pandemic has also driven greater interest in health and well-being, increasing demand for fitness trackers and other wearables as we all walk more and eat out less. The lesson is to provide your best forecast as far forward as possible, but don’t over-order. That way we can all prosper, making the most of the supplies we can secure.