Supply chain disruptions cause major problems for electronics manufacturers and service providers. Disruptions also draw attention to weaknesses in a supply chain management strategy. Though no one can really anticipate a supply chain disruption, every company can and should be prepared for one to occur. In this post, we cover what a supply chain disruption is, how it differs from supply chain volatility and how to deal with disruptions in electronics manufacturing.
What is Supply Chain Disruption?
A supply chain disruption is a defined event that negatively impacts supply and demand, is unpredictable, and requires a reactive response. Disruptions can occur at any stage of the supply chain, from sourcing raw materials to manufacturing the electronic components, and usually creates dramatic surges or dips in supply and demand. The impact can vary throughout the supply chain and a single disruption can cause a chain-reaction, spurring other disruptions. Disruptions are either small and localized, affecting only a few industries or businesses, or they are global and therefore more widespread. Examples of supply chain disruptions include:
- Natural disasters, such as floods, earthquakes, tsunamis, and hurricanes
- Price hikes of raw goods and materials
- Transportation failures, such as shipping damages and major traffic delays
- Cyber attacks and digital breaches
- Geopolitical instability, such as obstructive civil unrest
A current example of a supply chain disruption is the ongoing COVID-19 pandemic. This global disruption has majorly impacted the electronics industry, creating both short-term and long-term damage. 53% of product launches have been delayed or canceled due to COVID-19, according to a recent survey conducted by Dimensional Research and Supplyframe. The survey also highlighted the broad effects of the pandemic. 35% of respondents reporting that they have had to redesign products to replace components that are no longer available 37% reporting that their overall component costs have increased.
Disruption vs. Volatility
With supply chains being interdependent, inefficiencies occur even if there has not been a disruption. Turbulence in the supply chain is referred to as volatility. Though it is widely assumed that disruption and volatility mean the same thing, they do not. Understanding the differences between the two is crucial to determining which strategies, tools or processes will be used to overcome a supply chain challenge. Unlike disruption, supply chain volatility is not a single event. It is simply the result of the natural ebb and flow of supply and demand.
Examples of supply chain volatility commonly seen in the electronics industry include, but are not limited to:
- Mild to moderate transportation and shipment delays
- Seasonal or cyclical fluctuations in commodity prices
- Shifts or updates of international compliance standards
- Accelerating technology lifecycles
- Natural resource availability or scarcity
- Changes in consumer preferences and trends
Dealing with Disruption
In order to thrive amid disruption, a contract manufacture (CM) or an electronic manufacturing service (EMS) provider must be prepared for one. Overcoming disruption often requires a company to have:
- A proactive supply chain strategy that includes reliable partners and a contingency plan
- The ability to react quickly and decisively
- The ability to shift supply chain priorities to compensate for roadblocks and mitigate trickle-down issues
A well-thought-out and proactive supply chain management strategy is the most important requirement and should involve having strategic and reliable partners in place. When you work with Sensible Micro, you are working with a supplier you can trust and a partner you can count on. We are able to stock, source, and distribute electronic components and hardware to manufacturers of electronic products across a wide variety of industry segments. With our in-house inspection lab, exceptional customer service, numerous authorized lines, and vetted network of global suppliers, Sensible Micro can help make your supply chain more resilient.
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