The continuing shortage of electronic components is still affecting businesses all over the economy. The shortage and other supply chain crises like increasing port congestion and a deficiency in truck drivers have made electronic device manufacturing more difficult.
These strategies can be very effective for businesses trying to navigate the shortage until there is more supply.
Other essential components and raw materials are also in short supply -- making manufacturing challenging even when businesses can source the semiconductors or semiconductor-dependent parts they need. The pandemic and challenges in the supply chain have also affected the availability of important passive and power supply components such as multilayer ceramic capacitors (MLCCs), transistors, diodes, and resistors. These components, like semiconductors, can be difficult to source.
Experts don't know how long these shortages will continue. Many experts predict that there will be some relief for manufacturers in mid to late 2022. For example, Yale Development Economist Guillaume Assogba told Windows Central he expects the end of the shortage in late 2022. Assogba predicts that the electronics component and consumer tech industry will have stronger ties, which will lead to consumer tech manufacturers recovering first. Sectors that didn't work as hard DURING the pandemic to keep electronics component manufacturers connected may not be able to recover until early 2023.
Businesses should expect to run out of components and electronics shortly if they are not facing shortages at this time.
To address the shortages, businesses are embracing new strategies. Companies can apply these strategies to all industries and sectors. For example, businesses can benefit by developing stronger relationships with component suppliers. 911EDA has long-standing relationships with many part manufacturers.
Establishing Partnerships with Suppliers
These relationships and frequent communication can mean suppliers can provide the most current market information, advance notice of part availability, and advise on navigating future shortages. Businesses that maintain good relationships with their suppliers will likely have an easier time recovering when the deficit ends. Many chip suppliers offer preferred customer programs and similar initiatives to customers who commit to long-term business relationships. A business that can afford to lock in a contract for six months or more may be able secure essential components long into the future.
The company can prepare for future crises by incorporating resilience in its supply chain. A brand can protect itself from future supply chain shocks by diversifying suppliers and expanding storage capacity for essential components.
Businesses should avoid grey-market or unofficial suppliers when trying to diversify their supplier base or manage current shortages. These resellers and suppliers may not be as reliable or quality-oriented as more trusted suppliers. This can lead to a reduction in the number of suppliers that are legitimate and less trustworthy.
Modifications to Manufacturing Processes and Product Designs
Companies may need immediate solutions for manufacturing and supply chain problems. Companies that cannot source the desired chips may need temporary replacements. One option is to replace current chips with chips with more or less memory. For larger chips, budget adjustments might be required. However, smaller chips may only work with new firmware with less memory.
Short-term solutions to product availability problems may require a design that addresses shortages. This is especially true for industries that are unlikely to see relief until 2023. The business can prepare for future crises by preparing new designs in case of future shortages. Flexible designs that can be reconfigured quickly based on component availability could help keep production flexible and allow the business to move rapidly in case of shortages.
911EDA supports quite a few companies by identifying available alternative components and incorporating design changes.
Planning is a Way for Businesses to Navigate the Electronic Component Shortages
Experts predict the shortage of electronic components will continue well into 2022 and possibly beyond for those industries that have not had strong relationships with suppliers. Components such as resistors and transistors may not be available until then.
With proper planning, businesses can navigate the crisis and plan for future supply chain disruptions. This shortage may be easier to manage if stronger partnerships with suppliers and a diverse supply base exist.
If you are experiencing component shortages, contact 911EDA to set up a meeting to discuss your options.