As we referenced in a blog post late last year, the electronics industry is suffering from a components shortage that is negatively impacting lead times. While we were hoping this issue would be resolved early in 2018, it sees the problem is still lingering.
The long lead times began last year, the result of a “perfect storm” that even effected major brands like Apple. Higher demand for components, mergers and acquisitions across the industry (which, in and of themselves can cause delays), capacity constraints and obsolescence are all working together to create this climate.
If there’s good news here, it’s the spike in demand for components; supply will eventually catch up. A major contributing factor in the shortage is the demand for “connected” products as part of the “Internet of Things.” The AMPT blog notes that there are more than $31 billion connected IoT devices in 2018 across many different verticals. The demand for these smart units and the impending 5G connectivity is also driving the need for more powerful devices, which further contributes to the shortage.
The bad news is that the lead times are even longer than expected. While most industry reports put lead times at about 20 weeks, for many parts – particularly in the automotive industry – the wait may be as long as 52 weeks.
Again, this is an industry-wide issue, and certainly not exclusive to Etratech. That said, we are making every effort to stay ahead of the challenge, and we are taking the following steps to mitigate any issues for our customers:
- We continue to proactively address supply chain disruptions as they relate to ongoing production. We are working directly with our customers, distributors, manufacturers and any other parties we need to include to minimize or eliminate impact to delivery schedules.
- We are adjusting all our planning to stay ahead of the shortage as much as we can. That means requesting forecasts of product delivery requirements as far out as possible, ideally up to a year. Along with that, we’re requesting purchase orders for products and associated delivery dates as early as possible.
- Additionally, we’re preparing Materials Purchase Authorization Agreements to get those long lead time components on order and in-hand as quickly as possible.
Overall, dealing with these items is part of the expertise and value Etratech’s global supply chain management capability provides to our customers. Through our Total Acquisition Management (TAM ™) program, we’ve developed strong relationships with trusted suppliers all over the world. While that may not help us secure components any faster, it does ensure that we’ll always deliver the best quality components to make sure that your products are as reliable, safe and high-quality as you expect.
The component shortage is expected to last throughout 2018, but through the measures outlined above, we’ll do our best to get your products to market in as timely a fashion as possible – and without compromising quality.
Please feel free to contact our team with any questions or concerns.