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Smarter planning can alleviate supply chain challenges


With electronics component shortages set to continue, the onus remains on display system providers and their partners to source alternatives and plan ahead as much as possible, writes Pete Semerak, SVP product, Densitron


W


hen the latest supply chain crisis began in early 2020, few observers would have predicted that it would


still be going strong three years later. But with increasing global instability adding to pandemic-era pressures, shortages in many areas of electronics componentry are still very much ongoing – and widely expected to last for a year or two yet. All of which means that display technology providers and their partners are having to plan more carefully across all fronts – from first designs to delivery. It’s quite possible – indeed quite likely – that preferred suppliers won’t always be able to provide what you want. And in an increasingly unpredictable world, it’s important to consider contingencies for both existing and possible future circumstances.


In this spirit, I’d like to offer a short list of pointers/trends that should allow you to chart a calmer course through what could be rather perilous waters in the year ahead…


1. Supply chain issues will continue to have a marked impact on innovation. There is no getting away from it. From a design perspective, one of the biggest challenges our sector faces is innovation being hampered by ongoing problems with the supply chain. I know from conversations with partners and other industry colleagues that many are expending an enormous amount of their developmental resources – sometimes as much as 80 per cent – on dealing with ‘end of life’ components and coming up with substitute solutions to meet the needs of their customers.


The unfortunate reality is that this is 26 February 2023


not going to change a great deal in the short-term, so it’s likely that the broader, long-term pace of innovation in the sector will be slower for a while.


2. Having alternative sources of components is vital. One of the few positives to be drawn from the often bleak events of the past few years is that companies in every sector have been obliged to think more carefully about their supply chains. In some cases, these will have been too reliant on one or two long-term suppliers and will not have taken much account of local factors. That kind of thinking is surely now becoming a thing of


Components in Electronics


the past. If your component lead-times have suddenly shot up from 12 or 26 weeks to 52 weeks or even longer, and you do not have good alternative sources, then you are going to be in big trouble. So, the smartest companies are continuing to evaluate every part of their supply chain and making sure that it is fit to deal with not only today’s circumstances, but those we are likely to face in the next five to ten years. One consequence of this is likely to be an increase in ‘nearshoring’, whereby partners and suppliers that are located more closely are sought – a trend that will also have benefits in environmental terms.


3. Where possible, component stockpiles will be greater than before the current crisis. Of course, this is easier said than done. At the moment, many areas of componentry are still affected by serious shortages that tend to mean the smaller or medium sized companies can lose out to global players placing huge orders. But as things begin to improve over the next 12-18 months, it will be possible for companies to think about their stocks and how demand might fluctuate over the longer-term. Given the events of the past few years, it would be curious if this did not result in a shift away from a ‘just in time’ approach to supply and manufacturing.


www.cieonline.co.uk


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