And just like that, it’s 2023…
Casting our minds back to a year ago, things looked a little different. We started 2022 off with a continuation of COVID-19 guidelines, and although the cautions around COVID haven’t gone away completely, last year gave us (and manufacturers everywhere) the opportunity to get back to business.
Of course, it wasn’t always easy. Last year dealt the electronics industry a few tricky hands. So, what went on — and what are our plans for the future?
Component lead times
Manufacturers have faced continued challenges with acquiring and maintaining their stock — triggered by the COVID-19 pandemic and compounded by Brexit disruption and ongoing geopolitical tensions.
Everything related to the supply chain — from manufacturing to freight and logistics — was impacted when the world went into lockdown in 2020.
Fast-forward to 2023, and the global semiconductor shortage continues to impact manufacturing lead times all over the world.
Last year, lead times appeared to affect every type of component — and although this has started to stabilise slightly, some new supplier quotes will still show lead times of more than 52 weeks. For specific manufacturers, this is likely to continue well into 2024.
If we’ve learned anything, it’s that to cope with fluctuating changes in demand, the world needs a more diverse supply chain. If electronics manufacturers can diversify their supply chain away from overcrowded locations and bring it closer to home, demand will likely level out.
Any company that needs electronics design as part of their product development process will have been affected by the global chip shortages.
It’s no surprise that increased prices and lead times have impacted businesses and customers worldwide as stock dries up and the pressure grows. Now, the surge in demand is exceeding the ability to supply, with many companies unable to fulfil their customers’ requirements.
As many electronic parts are non-returnable and non-cancellable, suppliers are pressing for orders to fix allocations. Having a reserve of components offers more flexibility; ordering parts as and when they’re needed can have manufacturers waiting for months.
Of course, there’s a balance of risks to be considered. Early purchasing of supply gambles that the parts could ultimately be unsuitable and have to be scrapped or potentially sold on, compounding delays, waste and price hikes rather than alleviating these problems.
In the current landscape, however, electronics manufacturers aren’t afforded the luxury of testing the waters. After meticulous inventory checks and optimal forecasting, they’ve found it safer to commit to the project and order parts in advance.
For us at EMS, transparency and trust have been essential throughout it all.
We’ve built a portfolio of reliable contacts within the manufacturing community who we’ve worked with for years.
We still urge our customers to get ahead of the game by putting orders in early wherever possible to reduce the disruption. But by being flexible and adaptable and working with customers to find solutions and suggest alternatives, we’ve found ways to keep production flowing.
This year won’t be a magic return to ‘normal’, but the lessons learned from the challenges of 2022 and the improving component market will mean we can focus more on business again.
So, what can we expect in 2023?
For us, these developments will mean more time to update our quality processes and procedures, develop our existing investments and review potential new investments that will help us to continue meeting expectations.
We understand these are difficult times for the electronics manufacturing industry, and we’re working hard to support our customers in 2023. Don’t hesitate to get in touch to see how we can help with your next project.