FEATURE Supply chain & logistics
Resilient supply chains for electronic components
A
unique combination of global economic factors is continuing to impact supply
chains across many sectors. The Covid-19 pandemic has changed how businesses operate for good, and the UK’s exit from the EU has made the sourcing and supply of components much more challenging, with many imports now subject to additional cost and administration requirements.
Supply chain challenges have also been exacerbated by the Russian invasion of Ukraine, while the global rise in energy costs has created greater fi nancial burdens which companies are having to pass on, at least in part, to their customers.
The impact of these factors has been felt
acutely, not least in electronic component manufacturing and distribution.
The resilience challenge Availability in some areas has been severely impacted, with costs increasing across the board. Component rises are anticipated into 2024, further challenging the resilience of the supply chains.
The possibility of a complete loss of supply without warning has been a very real one. That in turn engenders a requirement to secure alternative sources of supply at very short notice, in all likelihood at greater cost and with challenges that so often come with introducing a new supplier. This is exacerbated by the decisions made by some manufacturers to move production away from China to diversify their supply chains, which will not be a rapid process and will again have an impact on availability in the short term.
Companies have taken various measures to tackle the shortage of semiconductors. According to McKinsey, the automotive sector has even established dedicated ‘war rooms’, pooling supplies and collecting more sophisticated data on the semiconductor value chain and chip manufacturing locations to make informed decisions. Where availability challenges can’t be
overcome, there is inevitably an impact on production schedules, with potential delays to deliveries – and associated costs emanating from penalty clauses in contracts – as well as the impact on cashfl ow and customer satisfaction. An additional challenge occurs when a
preferred part is unavailable and there is no exact alternative on off er. The ramifi cations of
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this can be even greater, entailing partial or complete redesign of the end product.
Proactive solutions
Many of these challenges can be addressed through a judicious use of resources such as price comparison websites specifi c to a sector. Among them is
oemsecrets.com, whose founder and Managing Director, Sam Cowley, says: “For many years, supply chains were relatively steady and reliable and it was not a problem for buyers to simply source all of their requirements from a few suppliers – or even just one. Prices were similar and the value extracted from shopping around was scant, given the amount of time involved. However, in the current, more volatile climate, there are far greater risks associated with using a single source of supply – and in any case buyers need to weigh up a number of factors such as price, availability, suitability and lead times.” “Freely-available resources such as
oemsecrets.com allow buyers to see all products and sources of supply, and make an informed decision on the right one for that specifi c requirement at that time. They can also more readily explore alternative suppliers and products, and put strategies in place to secure supply should one supplier be unable to deliver.
Oemsecrets.com informs of new product introductions across the market, for more competitive pricing, better availability or higher suitability. Overall, this approach will enable buyers and their companies to forge resilient partnerships with a range of suppliers, ensuring an overall robust supply chain which can withstand any challenge – economic, technical or logistical,” concludes Cowley.
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Automation | October 2023 25
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