Charcroft Electronics’ director, Roger Tall, explains that purchasing professionals look set to continue to face supply chain issues in 2023
In 2023 the cause of supply chain disruption will be different but the solutions needed to get components delivered in 2022 will remain for the coming year. Buyers will face a headache building a complete bill-of-materials and engineers will continue to spend more time identifying alternatives for current builds than developing new designs. OEMs have already withdrawn some end products and switched to building products which have higher margins and use available components.
Outlook for growth
It was expected the market would soften in 2023 but, so far, lead-times for passive components have been steady, with no significant reduction. Component manufacturers will also be carrying over orders taken in 2022.
The defence sector has certainly seen increased activity and the conflict in Ukraine has driven governments to commit budget to defence spending. However, for many other sectors some throttling of growth is likely, with many expecting a flat year in 2023. Further disruption is also possible from the volatility in foreign exchange rates for dollar-based components.
An increase in on-shoring or re-shoring will be used to offset the impact of increased shipping costs and disrupted availability of components manufactured in the Far East.
Different drivers, same solutions
The issues that many OEMs and CEMs will face in 2023 will often rely on distribution to smooth the supply chain. High-end OEMs and CEMs will continue to need specialist support, including long-term agreements (LTAs) and the ability to schedule demand to flex build requirements.
Speed will be a vital factor to enable a distributor to respond to changing market conditions. For an independent distributor, rather than a global distribution network, short lines of communication and a flat management structure mean decisions can be made and implemented quickly. This can include developing specific solutions for individual customers.
By holding a deep level of UK-based inventory, the distributor will help OEMs and CEMs avoid delays in customs and shipping. Investment in inventory should reflect customer forecasts and potential requirements, rather than being a shallow inventory across a complete component range.
Another solution to overcome procurement issues is to use UK-based manufacturing. A supply issue with a legacy or obsolete passive can be solved with a custom passive assembly which fits the electrical, mechanical and environmental specifications of the original component.
The most important factor for customers in 2023 is that the distributor partner should have the knowledge, skill and above all the willingness, to identify and develop fast solutions to smooth the supply chain.