What comes around goes around

ECCO’s president, Bernard Gizzi

ECCO’s president, Bernard Gizzi, is confident the electronic component procurement community will soon be back to more balanced material planning and availability

The phrase ‘what comes around goes around’ offers insight into 2023’s component supply chain. I say that with full confidence that contrary to those who said ‘this cycle will be different’—given factors such as electrification, IoT, aerospace, post-pandemic pent up travel demand, logistics chaos, infrastructure investment and geo-political influences to name a few—there will be a change in our industry’s record profits and revenues.  This will start with the global and US economies beginning to feel the effects of monetary pricing and government’s efforts at mitigating runaway inflation.

In fact, Northern Trusts’ USA capital advisers released their forecast sighting slower growth for most market segments due to slower than expected transitions to renewable energy sources, a prolonged war in Ukraine, restructuring of global monetary debt and further nationalistic tendencies of governments who have been burned by relying on political adversaries for resources.

So, how does this affect our industry? It allows the procurement community to get back to a more balanced aspect to material planning and availability. Allocation will persist but buyers can take a minute to breathe, think and plan vs the reactionary environment of the past 18-months.

Lead times will normalize and pricing will stabilize and likely decrease (for IP&E commodities and specific active commodity categories).  All of this can drive competition and eventually M&A activity which could lead to the closure of production lines/facilities and lead to spotty product constraints: oh boy there we go again, what comes around, goes around.