The time before you can receive a full bill of materials has drastically increased in the past years. In addition, there is a shortage of components leading to the incompliance of many companies’ output in the world. But that doesn’t mean it’s the end for these companies. Anyone can overcome this with proper planning and a bit of caution.
Why is there a shortage?
Recognizing the causes behind a shortage is usually the best approach to address it and come up with solutions for getting past them. People currently attribute these shortages to three primary factors: the growing automobile industry, the Internet of Things (IoT), and the ongoing Mergers and Acquisitions (M&A) activity.
The Growing Automotive Sector
It is now possible for electrical components to move thanks to the development of smarter vehicles and inventions. The dependence on electronics will grow as cars grow increasingly high tech. As a result, there is a shortage of components since manufacturers frequently buy PCBs and components in large quantities, placing a burden on PCBA producers and assembly businesses.
Internet of Things (IoT)
Thanks to the Internet of Things, our entire homes are now wirelessly connected. Nowadays, many domestic goods, including refrigerators, freezers, heating systems, and even light bulbs, are equipped with bluetooth and Wi-Fi chips. By 2020, the IoT will include over 20 billion devices. This shows that many board components are being sent to new, unanticipated manufacturers.
Mergers and Acquisitions (M&A)
The number of mergers and acquisitions in the technology sector peaked in 2016. M&As cause a tumultuous period in product delivery. Chaos results from rushing supply agreements and unfulfilled orders. Supply chain gaps result from the cessation of certain products as businesses are acquired or shut down.
How To Manage Component Shortages
Companies still require components to carry on with production. As a result, you cannot just hope things will turn around quickly. Take preventative action to help safeguard yourself from these shortages.
Create a strong network of dependable vendors
Knowing who supplies what enables you to anticipate which goods could be challenging to locate should shortages occur. That way, switching suppliers will be simple and cause little interruption for you. There are many advantages to keeping positive supplier connections. When there are supply problems, suppliers who can count on their customers are more likely to prioritize them. Keep your suppliers close by. The survival of their business depends on having a trustworthy client or supplier, which is in the interests of both sides.
Understand inventory requirements
Prevent losing out by having a clear awareness of your supply requirements. Having a solid supply of replacement parts on hand for popular products is always a smart idea. Make a few larger purchases to guarantee that you have enough to last through a few months of supply disruption. Spending more money than necessary could seem counterintuitive, but that early outlay could mean the difference between consistent work and a few unsuccessful months. In addition, avoid stock shortages for those products by identifying the parts you can replace and keeping a few vendors on hand.
Recognize supply concerns and forecasting challenges
Be familiar with how your suppliers operate. That way, you can determine your own lead time for manufacturing your goods and offer improved delivery times. Too many businesses try to conceal their production predictions, which makes it difficult for them to collaborate with their suppliers. By being honest with one another, you can collaborate to make sure you receive what you require when you require it. Based on forecasts from your created output, you can better personalize your deliveries to your suppliers and share your work forecast with them.
Every industry has component shortages regularly, but the problem is becoming much more widespread than what businesses can handle. The good news is that we can avoid significant production disasters and provide a top-notch client experience with a little forethought and business sense.
Download this infographic.