Distribution
A proactive approach to component sourcing
Paul Bentley, managing director of GD Rectifiers, explores the key elements of taking a proactive approach to component sourcing and how it can benefit customers
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n today’s dynamic and increasingly complex supply chain, power electronic component distributors and customers are facing unprecedented challenges in securing the parts they need to keep production moving. From global supply chain disruptions to technological advancements, a proactive approach to component sourcing is becoming essential to maintain continuity, control costs, and stay competitive. By strategically managing sourcing, fostering strong distributor relationships, and utilising technology, power electronics companies can mitigate risks and supply chain disruption.
1. Understanding the challenges in component sourcing The sourcing of power electronic components is facing unique pressures due to several factors: Supply chain disruptions: Events like the COVID-19 pandemic, trade restrictions, and geopolitical tensions have impacted production and distribution channels, leading to shortages and increased lead times. Rapid technological advancements: With the rise of electric vehicles (EVs), renewable energy systems, and other power-hungry applications, demand for high-performance power electronics has surged. Increased demand for specialised components: The growing demand for specific components like insulated-gate bipolar transistors (IGBTs), MOSFETs, and wide-bandgap semiconductors has created a competitive environment for these essential parts.
Given these challenges, both distributors and customers must adopt proactive sourcing strategies to prevent costly downtime and maintain consistent access to critical components.
18 November 2024
2. Building strong partnerships with distributors
A collaborative relationship between distributors and customers is essential for mitigating risks in the sourcing of power electronic components. Effective partnerships can provide better access to inventory, technical support, and insights into future supply trends. Partner with an authorised distributor that provides: Open communication: Regular and transparent communication helps customers stay informed about product availability, lead times, and market conditions. This can include monthly updates, market reports, and even direct notifications when specific stock levels change or when new components are available. Strategic inventory management: By working closely with distributors to set up buffer stocks or establish safety inventories, customers can mitigate risks of component shortages. In turn, distributors can benefit from predictable demand and the ability to plan their stock levels more effectively. Vendor-managed inventory
(VMI): VMI programs, where the distributor manages inventory on behalf of the customer, help reduce stockouts and optimise inventory
Components in Electronics
levels. For power electronics components, VMI is especially valuable for ensuring critical parts are readily available when needed.
3. Implementing forecasting and demand planning
A forward-looking approach to forecasting and demand planning is key to successful component sourcing. Advanced forecasting enables customers to anticipate their needs and provides distributors with valuable data for stocking decisions. Data-driven forecasting: By leveraging data from previous orders, production cycles, and sales trends, customers can create more accurate demand forecasts. Additionally, distributors can use these insights to anticipate demand fluctuations and adjust their sourcing strategies accordingly. Incorporating market trends: By keeping an eye on the trends affecting power electronics (such as growth in EVs, renewable energy, and industrial automation), customers can proactively plan for potential shifts in component demand. For instance, if a spike in demand for IGBTs or silicon carbide components is anticipated, customers can work with distributors to secure advance orders. Regularly updating forecasts: As
market conditions, production schedules, or design requirements change, updating forecasts regularly helps ensure they remain accurate and actionable.
4. Leveraging technology for supply chain transparency
Advanced technology solutions have transformed the ability to manage and monitor the sourcing process. By integrating tools that provide real-time visibility, both distributors and customers can identify risks early and make informed decisions. Supply chain management software: Supply chain software, such as enterprise resource planning (ERP) and specialised inventory management tools, can track stock levels, lead times, and demand. This visibility enables both parties to proactively address supply chain gaps. Real-time tracking and alerts: Real- time tracking tools provide updates on shipment locations, inventory levels, and order status. For critical components, this enables customers to respond quickly to delays or disruptions.
Risk mitigation through obsolescence management In the power electronics industry, where components can be highly specialised, managing obsolescence is crucial to maintaining a stable supply chain. A proactive approach to obsolescence management involves tracking the lifecycle of critical components and planning for transitions. Lifecycle management: By working with distributors to stay informed about component lifecycles, customers can prepare for end-of-life (EOL) scenarios. Many distributors offer EOL services that help customers manage the transition from outdated parts to newer versions. Last-time buys and buffer stocking: When a component is approaching
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