How Can You Overcome an Electronic Components Shortage?
October 31st, 2018
The ever-increasing demand for electronic components is far greater than the current supply. Even more troubling, the demand for electronic components also exceeds manufacturers’ current capabilities. Manufacturers cannot fabricate these components quickly enough to meet market demand.
While manufacturers have been ramping up their capacity, those efforts may not bear fruit until 2019. In the meantime, new tariffs will likely further stress an already over-extended supply chain and many electronics manufacturers have resorted to placing double orders to ease the strain on their manufacturing processes.
The electronics components shortage is expected to get worse, with long lead times and a flood of counterfeit electronic components on the market. You may be tempted to double order to meet your manufacturing needs, or to procure components through alternate, unauthorized sources. But those drastic measures only exacerbate the problem and could put your company at risk.
3 Questions to Ask Suppliers During an Electronic Components Shortage
The current electronic components shortage is significant. But our industry has been through this before, and it is possible to weather the storm without resorting to double ordering or risking it all by procuring component parts from an unauthorized source. Now is the time to rely on your suppliers and leverage their expertise to make sure your procurement needs are met. To make sure your suppliers are well-positioned to meet your needs, ask them the following three questions:
1. Do you have in-stock inventory available? When supply and demand are in balance, it is common for suppliers to adopt lean inventory practices. But with a shortage of components, it is crucial to keep inventory in-stock to meet demand. At Velocity, our traders have access to our in-stock inventory in three global distribution centers as well as exclusively consigned partner material and private stock offers so we can respond quickly to your needs, even in a market where there is a shortage of electronic components.
2. What does your supplier network look like? No distributor should rely on just a handful of suppliers, especially when dealing with a worldwide electronic components shortage. Over the years, we have developed a global network of qualified suppliers. This network is always growing and changing as new suppliers are added, and existing suppliers are reevaluated.
3. How do you source your electronic components? It’s important to understand how your supplier acquires electronic components, especially when market demand is high. How quickly can they access the global market? And how much of the worldwide inventory is available to them? Do they have protocols in place to identify counterfeit electronic components and unreliable suppliers? Velocity Market Search is our proprietary sourcing software. With this tool, our traders are able to access 92 percent of the available inventory worldwide. With the touch of a button, we know the global availability of the component and contact information and vendor rating for each supplier. Our system also displays current and historical pricing data, as well as manufacturer cross-references.
Even in the best of times, electronic components procurement is challenging. But when the market is experiencing a severe shortage, it is critical to work with a supplier that can meet or even exceed your expectations. Talk with your suppliers to see what they can do to help you secure the components you need when you need them, particularly during this final quarter of 2018. And if you have components that are proving especially difficult to procure, give us a call. We’re up for the challenge!