Market Review


Time for pearls to shine


Debbie Rowland, director of Charcroft Electronics, gives a review of the market for the company in 2017


bracing themselves for relatively flat predicated growth for 2017, they cut back their resources in order to maintain their competitive edge. Then as the orderbooks started to fill the Manufacturing Resources Planning (MRP) systems began to pull orders forward which meant that leadtimes were pushed out. From March 2017 onwards leadtimes for passive components began to slip dramatically. The leadtime for a commodity surface-mount ceramic capacitor has now gone from two to four weeks up to 20 weeks.


Debbie Rowland, director, Charcroft Electronics


I


t has been a good year for the electronics industry. Whilst analysts were predicting growth of around four per cent, the Electronic Components Supply Network (ECSN) recently stated that its members were reporting actual 2017 growth of around 17 per cent. The reason for this is clear: we live in an


increasingly smart and more connected world. We can now choose to control our homes from our offices and the major utility companies fitted over a million smart meters in the third quarter 2017 alone (source: www.gov.uk). And of course, the Internet of Things is soaring towards its projected revenue of €250 billion by 2020 (source: Forbes). Even high-reliability sectors are feeling


the increase. Mid-range cars now offer infotainment systems as standard and the NewSpace market saw the number of Low Earth Orbit, (LEO) satellite launches more than double in 2017 compared to 2016. Whilst this unexpected growth is welcome, it does come with one significant drawback. This major up-turn in demand has seen the component manufacturers’ orderbooks and production lines filled to capacity or, more accurately, to over-capacity.


As the component manufacturers were 24 December 2017/January 2018


It is not just the high-volume commodity parts that are affected. Even the radial and axial passives which are typically used in lower-volume, higher-reliability sectors are experiencing a knock-on effect as the manufacturers pull resources to meet the demand for commodity passives. One manufacturer is even quoting a leadtime of over 63 weeks for a specialist axial aluminium capacitor. The good news is that leadtimes are beginning to stabilise although they have not reached the point at which they are shortening. OEMs and CEMs are therefore


facing some weeks or months of uncertainty and the risk of line-stops. As the interface between the component manufacturers and OEM/CEMs, distribution will have a major role to play here. At the very least, distributors should have been monitoring leadtimes closely enough to have already increased their buffer stocks. Charcroft has also contacted customers to advise them of any changes in leadtimes and provided support to avert potential delivery issues.


What’s the alternative? This support can take a number of forms such as identifying a direct or close alternative which is available on a shorter leadtime. For example, standard surface- mount ceramic capacitors from mainstream component manufacturers are currently on a leadtime of around 22 weeks. In contrast, a niche UK-based manufacturer has continued to maintain an eight-week leadtime for parts which are direct or close alternatives. Viable alternatives can also be found by tweaking the specifications of a passive component. As the part numbers for passives typically describe the specification this is a relatively easy exercise for a distributor which has specialist product knowledge. Changing to a device with a tighter tolerance simply means changing one letter of the part number, which can free-up availability without compromising


the design. Charcroft would also look for alternatives with a higher voltage or temperature rating; a better dielectric; or different terminations in the search for availability. Other changes, such as substituting a dipped instead of moulded case, can also provide a suitable alternative. Down-grading a specification is another option. It is not unusual to find that some components in a system have been specified for an operating temperature of 125°C whilst others may only be rated for a maximum of 85°C, which may allow some procurement flexibility. All of these options and more can help to keep a production line moving.


Re-packaging to avert a shortage Sometimes it is not the component itself which is unavailable, but the way in which it is packaged. Here, the options include swapping from paper to plastic tape or changing the reel size. With its in- house tape-and-reeling capability, Charcroft can buy bulk stock for tape- and-reeling on behalf of a customer or add leaders to cut tapes.


Getting flexible with logistics Logistics are another area in which flexible thinking can be used to improve leadtimes. It is quite common for larger manufacturers to have components shipped from South America into Europe before the consignment is shipped to the UK. This process typically takes two weeks which can be reduced to a matter of days if the manufacturer will agree to sending an express shipment direct to the UK. Changing the method of transport can also cut delivery times. Shipping components by boat can take up to seven weeks, whereas paying a logistics surcharge to fly the parts in can reduce this to just two or three days. In this way, an express delivery charge of as little as £100 could potentially protect an OEM from a £100,000 per day penalty clause for non-shipment.


Time to shine


This is not the first time that the customers have faced shortages and it will certainly not be the last time. But each new challenge which is accepted and overcome makes us stronger. Just like the oyster which turns a piece of grit into a valuable pearl, so 2018 will be the year in which the pearls in our industry can really shine.


In-house tape and reeling can help to avert a line-stop Components in Electronics www.charcroft.com www.cieonline.co.uk


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62