Stabilising critical pricing

Charcroft Electronics director, Debbie Rowland

Charcroft’s Debbie Rowland emphasises that talking matters. Talking to customers can allow new solutions to be developed, including stabilising critical pricing for up to eight years.

Industry is moving so fast customers need real help steering their way through lead-times and allocations. Past shortages were resolved quickly as facilities ramped capacity. This time shortages are not a quick flash, lasting for two years. This is partly due to increased demand but also availability and shipping costs, which have increased ten-fold over the past year.

Disruption is not confined to components, as some raw materials are also experiencing shortages. Cutting lead-times is not simply a matter of increasing capacity. New, more creative solutions are needed.

For Charcroft, talking to customers is important. It helps us understand each customer’s forecasts and concerns. Customers certainly want deliveries but they also need to stabilise pricing, including material and delivery costs.

Charcroft is looking years ahead and accepting the risk of investing in customer inventory more deeply than ever. Orderbooks have been extended to secure delivery and pricing of critical parts for timescales which range from six-months to 2030.

As a two-way commitment, the stabilised price is agreed with the customer and Charcroft will hold the inventory. For example, components received in June are scheduled to fulfil orders to 2030.

Alternative components can also be identified by discussing with the customer why the original component was specified. This lets product specialists adjust the parameters and identify viable alternatives.