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Partner with distributors to alleviate supply chain disruption
Paul Bentley, managing director of GD Rectifiers, talks exclusively to CIE Magazine about the component supply chain, minimising disruption and why partnering with a distributor can get your supply back on track
T
he power electronics industry has certainly experienced huge pressure over the past three years. We are seeing unprecedented supply chain
issues affecting the entire industry, particularly around semiconductors. It is the norm and a market trend that every few years the power electronics industry experiences a huge surge in demand for components but this time round we are contending against unusual circumstances. The industry is still dealing with the aftermath of Covid, increasing costs of raw materials and the huge demand for electric vehicles and charging stations. The semiconductor market is booming and both manufacturers and distributors are seeing a strong demand that is difficult to fulfil because of an exceptionally challenging supply chain.
Covid slowed and temporarily stopped the flow of raw materials, finished goods and disrupted manufacturing as a result. As raw materials are becoming increasingly harder to obtain, manufacturers are seeing price increases which they are having to pass on to customers.
Are supply chain issues still disrupting the power electronics industry?
The power electronics industry is still being massively disrupted by supply chain issues, historically it would be relatively normal to experience a 12-week lead time for a semiconductor component, however some manufacturers are now quoting a lead time of 1-2 years on selected parts. However, with careful planning and forward ordering it is possible to secure the inventory you need.
As an industry we need to ensure we’re more flexible and agile with our operations, especially when it comes to supply chain and obsolescence management. Working closely with suppliers and customers
26 June 2023
to seek alternative solutions is really important, without compromising on quality. Another factor to consider is where budgets may have been cut in production during slower periods, this will cause delays in customers receiving components and will start to have a knock-on effect.
What are the main negative impacts of the supply chain disruption?
The two main negative impacts in times like this is that the industry becomes a seller’s market and some of the avenues with parts in stock often charge over the odds for components which can have a negative impact on customers and their end application, budget constraints and the future lifecycle of the component. Often buyers will shop around or source an alternative modern-day replacement (if possible) which can impact the shelf life of the part that is being marked up. GD Rectifiers believes in doing right by its customers and component lifecycles, we constantly manage to avoid price increases to try and remain competitive to best support our customers.
Components in Electronics
Another major impact caused by the supply chain disruption is the increased activity found in the grey market with the reselling of components. Unfortunately, times like these create opportunity for companies that buy and sell counterfeit parts. In a time where buyers cannot accept 1-2-year lead times they are forced to broaden their buying resources which can sometimes lead to them being mis-sold counterfeit parts without realising it.
What have been the major changes in supply chain processes? The recent supply chain issues have highlighted the benefit to design engineers of designing parts that can be multi- sourced. Often with semiconductors it’s extremely difficult to design multiple parts from a wide range of manufacturers. It’s a time-consuming job on the off chance you would need to multi-source, however in times like these it’s extremely beneficial. It’s also key to work with a distributor like GD Rectifiers that has the technical expertise and strong relationships with manufacturers to be able to design-in products for their customers or offer
suitable alternatives from stock quickly.
Is Covid still impacting the power electronic components industry? Since Covid, companies have introduced new procurement measures. The pandemic highlighted just how over-dependent many countries were on China and the sheer volume of manufactured goods that are produced in that one country. We are now seeing a shift in the supply chain focus with manufacturers, buyers and procurement specialists all looking to broaden their sourcing options, having a more diversified supply chain strategy including a strong focus on sourcing components closer to home. Covid highlighted how important it is to have a procurement plan on home soil. At the height of Covid, it impacted the industry’s production output due to staff shortages, delayed deliveries and most importantly engineering skill gaps. During the pandemic many highly skilled personnel left their previous industries and retrained or returned to their home country which has left a shortage in certain markets, so the industry has seen a large
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