Front End | Electronic Components Supply Network Forecasting time... again!


According to Silicon Valley-based technology forecaster Paul Saffo, the “goal of [business} forecasting is not to predict the future but to tell you what you need know to take meaningful action in the present”. Forecasting is essential in any well-managed organisation but it has been likened to “driving a fast car, using only the rearview mirror for guidance”. In this article Adam Fletcher, chairman of the Electronic Components Supply Network (ecsn) adopts a Janus stance to review how 2023 actually turned out for the UK and Ireland electronic components market, compared to the performance predictions the association made this time last year and provides his thoughts on what 2024 is likely to hold in store


Financial planning


At a ‘macro’ level all organisations have to forecast future customer demand for their products in order to correctly allocate their often-scarce resources in a way that maximise their return on capital employed. At one time this financial planning process would be done annually but today is generally done on a dynamic 12-month rolling basis, where the organisation’s performance is peer reviewed each month by senior management who decide on the strategic changes necessary to improve or enhance performance. At a micro (operating) level management will seek to rapidly move to take advantage of changing market conditions and maximise output and sales revenues by tweaking many variables within their control, sometimes hourly.


Market comparison


Whilst it is important that organisations are seen to meet their own financial plans, it’s also critical that they are able to assess their organisations’ performance within the market(s) in which they operate. Businesses need to be able to compare and contrast their performance relative to ‘what’s happening’ in a specific market in order to determine if the overall strategies are being successful, or not. One of the key roles of industry associations like the Electronic Components Supply Network (ecsn) is to help its members to benchmark their own performance and future aspirations against the statistical reports by competitors in specific market segments and/or specific geographic markets. Among the tools the association provides to its members is an anonymised and amortised summary of the


12 November 2023


performance results it collects and collates every month. To assist the wider electronics industry in its knowledge and planning ecsn also widely shares this intelligence as “headline data” with publications within the trade media and elsewhere within the public domain.


ecsn forecast process ecsn is structured under a Leadership Group made up of forty industry specialists, most of whom have many years highly relevant experience that they are prepared to collaboratively share in support of the entire industry. Under their guidance ecsn members participate each year in the preparation of the association’s market


Components in Electronics


forecast for the coming calendar year. This is done through a combination of surveys, and numerous group and individual open discussions, the first of which is to garner the thoughts of member companies about how their current year will pan out, what problems they encountered in the market and how they overcame them. This is the basis of the association’s opinion about the industry’s prospects in the coming 12-month period. This is not an easy process: The association’s analysts have to cope with a very diverse set of returns, not least because the ecsn membership is drawn from a wide cross-section of organisations within the electronic components industry, but over a period of a


few weeks members’ views are synthesised into an overall industry market forecast that all believe is realistic and are prepared to publish.


We were wrong I have worked on the ecsn Market Forecast every year since 2005 and I’m pleased to report that the association predictions have generally proved to be accurate within a couple of percentage points. In the last three years however market growth has been much more volatile than our members anticipated, which skewed the outcomes somewhat. In the Forecast 2023 that we published in December ’22 the association predicted that electronic component


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