Fusion Worldwide’s CRO, Luke LeSaffre, explains how lead times continue to be impacted by strong demand from the automotive, industrial and enterprise segments
Over the last 16-months, lead times have been expanding rapidly at unprecedented rates, creating lead times of 52-weeks or more and making missed delivery dates the norm. In the last two months, we have started to see data that suggests contraction in certain segments. The question remains how long it will take for lead times to return to normal levels?
Given the protracted period over which lead times were extending—we started to see them take off in February 2021—recent data and feedback from customers indicates the decline will be more gradual. For each instance of a customer reporting an improvement of deliveries or order cancellation (thereby providing some relief to overall demand), we hear just as many instances of extended lead times into late 2023 and beyond.
Weakened demand may bring a quicker decline in lead times, as well as concerns about the global macroeconomic state. Assuming less pronounced changes in demand, we anticipate that lead times will remain extended for at least the first half of 2023, and possibly beyond for certain product categories such as older technologies. While demand for consumer-oriented end products is slowing down, markets for more automotive, industrial and enterprise segments are showing more resilience, and we expect that dynamic to provide some headwinds in the effort to bring down lead times in the quarters ahead.