Current electronics parts shortages are occurring primarily because of the recovering
economy as the supply chain hasn’t caught up with the demand being created in the
electronics manufacturing industry. Even one of the simplest parts we procure, monolithic
ceramic capacitors (MLCCs), are highly constrained. These capacitors are typically
treated as a commodity where you don’t expect to run into shortages because availability
has never been a problem. Recently manufacturers lack of production capacity to
meet demand of even these simplest devices is broadly affecting the industry.
In a normal distribution sales environment, distributors sell to customers on a
first- come, first-serve basis. The first orders placed are the first supplied.
In a manufacturer allocation environment like we are in at the moment, the manufactures
instruct distribution to whom the allocated parts are delivered, regardless of purchase
order timeliness. These allocations are based mostly on your history of procuring
this material and the amount you have procured in the past. New customers to the
table are the last to receive an allocation.
The increase of embedded electronics in automobiles has also created a strain on
the electronics supply change. With the proliferation of flat screen displays, navigation
systems, entertainment systems, USB and Bluetooth interfacing with handheld electronic
devices, control systems for both internal combustions and electric vehicle propulsion
have dramatically increased usage of electronic components. Where 5 years ago, the
average car would use between 2-3k capacitors, they now use, on average, 10-12k
of the MLCCs.
Also contributing to shortages, is the reliability and temperature range requirements
of the components needed for automobiles. These parts, generally the same as used
in the commercial market (but screened to tighter specifications), are sold at higher
prices into the automobile market. This leaves electronic contract manufacturers
scrambling trying to find capacitors anywhere in the world, in a growing number
of cases, outside of normal distribution channels.
Through strong relationships with major distributors that have been supplying us
with components for years. Experience and industry knowledge allow us to leverage
their current relationships to cover a great deal of would-be shortages for a variety
of products.
We also harness internal technical capabilities to cross check components with shortages
to other vendors or suppliers part numbers.
We encourage our customers to plan ahead and purchase as soon as possible. Try to
get a material bond in place with suppliers, if you have a relationship with them.
If not, get in contact with your electronics contract manufacturer and put a bill
of material (BOM) in place so you can start exercising the supply chain and find
your material problems. Open your AVL to as many manufacturers as possible. The
increased breadth of options will help mitigate potential shortages of a particular
manufacturer. Sole source components at your own peril! In procurement, it is always
the more sources, the better.
If you are ready to start manufacturing, contact us today to speak with one of our
experts.