The realization that crises can suddenly disrupt supply chains and bring operational processes to a standstill has been a constant theme in the electronics industry over the past two years. But it doesn’t even take a global pandemic to put a strain on the supply chain system. Even highly regional crises and events, such as a factory fire or a natural disaster, quickly paralyze the entire supply chain.
That their supply chains could prove so fragile is something even the hardest-hit industries would not have expected until the Corona pandemic broke out in early 2020. Active components, semiconductor chips, ferrites and resistors, capacitors, inductive or other passive components, sensors and much more are partially or completely missing from manufacturing companies. Even if the assembly lines are still running, they are often running on a low flame and always associated with uncertainty, because the continuation of production depends on the next delivery of parts. And with it the economic success.
Development engineers who don’t develop, but plug holes
In order to keep production and parts supply running today, development engineers are increasingly actively involved: Easing bottlenecks, finding new solutions due to supply issues, etc. The continuation of today thus directly impedes the progress of tomorrow, because developers cannot perform their actual tasks or can only do so to a limited extent.
Supply chains need to be stabilized. But how?
Rethink warehousing and stockpiling
Procurement and production just in time, reducing inventory, saving costs. Maxims that have been faltering since Corona at the latest. Many companies and their customers were abruptly made aware of the disadvantages. Expanding a company’s own warehousing can minimize procurement risks and help avoid bottlenecks both for and in production as well as their negative effects.
The development of second sources
Companies as well as distributors often only work with a small, manageable number of suppliers. For cost reasons, the search for new purchasing sources has so far not taken place at all, only in exceptional cases or too late. “Second sources”, i.e. additional supplier sources, help to seamlessly cushion any shortfalls or make them disappear in an emergency. Although an expansion of the supplier network incurs costs, a production stop is likely to be far more serious if the worst comes to the worst. Those who take precautions at an early stage can use their alternatives in the event of a crisis. (1) It may be tempting and initially obvious to apply the second-sources strategy primarily to core products. But how much have the past few years since the beginning of the pandemic taught us that even supposedly unimportant components can become gamechangers? It is therefore essential to always analyze and optimize the overall requirement, the supply chain in its entire breadth.
Global equalization and shortening of supply chains
In the globalized economic world, supplier hot spots have emerged over the years. In the event of a local crisis, it is not just individual suppliers that are affected, but a large number of them. To counteract this, it is advisable to set up or restructure supplier networks to achieve greater global decentralization. Decentralization reduces the risk of extensive capacity bottlenecks due to supplier failures. (1) The shortening of supply chains also has an effect. shortening of supply chains also has a supporting and stabilizing effect. If supply chains or entire value chains are relocated domestically, this additionally strengthens resilience. The resulting increase in costs should be viewed less as a loss calculation for foreign procurement and more as a stabilizing factor and prevention of costly failure. (2)
Identify problems early and take countermeasures
A certain degree of uncertainty and nervousness is due to the current situation on both the supplier and procurement sides. And it’s perfectly understandable: even supposedly small gaps in the supply chain can open up big holes in the business. The best way to solve such challenges has always been to work together. Listening. Thinking. Open, proactive communication between suppliers and customers helps to assess the situation correctly at an early stage and, if possible, to take countermeasures with alternative courses of action.