Avnet regional president, Americas electronics components, Dayna Badhorn, presents Avnet’s perspective on 2023: challenges ahead but light at the end of the tunnel
As 2022 draws to a close, Avnet is reflecting on another year of shifting sands in global technology supply chains. With the tumult of 2020-21 behind us, this year has presented its own obstacles to suppliers, customers and distributors, raising questions over what’s in store for 2023.
Our team at Avnet is forecasting continued, albeit new, uncertainties into next year. While some lead times are retreating, customers are still facing a growing list of inventory that isn’t accessible, whether components are stranded along the supply chain or have become the proverbial ‘golden screw’. This imbalance in the mix of available inventory means that, while many components are freeing up and the days of 40 to 50-week lead times are receding, end-products are still being delayed due to a small number of critical unavailable components.
To support our customers, Avnet has extended our pipelines to ensure we have the necessary inventory, and enhanced our collaboration with suppliers and customers to better understand their needs. Yet one of the most valuable adaptations we made was, on its face, one of the simplest: regular, detailed updates with lead time trends across product lines.
This practice of data-sharing is not something new. It escalated in the early days of the Covid-19 pandemic when customers were anxious over factory shutdowns in East Asia in Q1 2020. As the market shifted in late 2020 and the first signs of shortages emerged, our regular updates on lead times became a vital piece of the planning puzzle for purchasing professionals, helping them better understand what they could expect for inventory moving forward. In improving how we track this data, Avnet has also been able to gain greater insight into customer demands and supplier availability.
When it comes to inventory, Avnet is now managing a longer pipeline of products than ever before in our 100-plus year history. That means our greatest priority has been planning, particularly on high-service parts: components with high customer counts or high quote activity. By establishing a long pipeline with our suppliers, we’re able to proactively buy inventory that customers regularly ask us to quote for projects.
So where does the industry go in the next five years? Our prediction is a supply chain driven by far greater automation and a much larger digital footprint than we saw pre-pandemic. By making those improvements in-house, Avnet has made its vision of a supply chain control tower into a reality, creating a digital twin of the entire electronics supply chain for more visibility, agility and control.
While the industry needs to be ready for continued shortages over the coming years, we are seeing conversations shifting from current shortages to planning for the next quarter. That requires continued collaboration between Avnet, our suppliers and customers to understand factory plans and production needs.
Macroeconomic trends will have an impact as well. The recently signed Chips Act will undoubtedly drive more capacity, but demand could still outstrip supply for years to come. That’s particularly driven by rapid growth in the electric vehicle and its need for charging, clean energy and industrial IoT sectors as global markets shift to embrace these new technologies.