Newark Electronics’ business president of Newark, Uma Pingali, highlights how high-service distributors with wide, adaptive inventories help stabilize chaotic supply chains
In terms of 2023 performance regarding allocation and lead times, the situation will be much better than 2022. Allocations are few and far between and long lead times are subsiding. Customer backorders and book-to-bill ratios have returned to pre-Covid levels. We’re seeing inventory buildup at all levels, with certain segments impacted more than others.
Regarding obsolescence, some suppliers will try to trim offerings. Products not sold in high volumes or profitably, will reach obsolescence sooner. As end-of-life notifications come through, distributors must plan their supply chains, notify customers and work to stabilize their supply chains. This creates distribution opportunities but can pose a significant risk to customers.
Regarding the US economy, some segments will continue to support growth but others will decrease, resulting in an excess supply of inventory. This depends on which segments are rising or declining. We’re optimistic that the US economy will experience growth and next year will be lower in terms of inflation, but how low is debatable.
A disruptive supply chain is becoming normal, and inventories are much heavier. We anticipate that the market will be softer and 2023 will be a flatter year for growth, but we will still experience single-digit growth. Newark and other high-service distributors who are wide-breadth and adaptive inventory players will help act as a stabilizing force in an otherwise chaotic supply chain.