Supply chain analysis of the electronic industry

In the last decade, innovation in the electronic industry took a huge leap. It is projected that the demand surge will help the consumer electronics industry to reach a revenue of $723.6 billion in 2023, which will be 31.9% more than in 2022. While demand is increasing rapidly, supply is not so much. With several supply chain disruptions like raw material shortages, increased lead times, and price hikes manufacturers are struggling to keep up their production levels to meet the expected demand.

Are these supply chain disruptions caused by recent events?

Looking back, supply chain disruptions have been causing major production halts for a long time. In 2004, Apple delayed the launch of the iMac due to the delay of the G5 chips and missed estimated $32 million dollars in revenue. In the past two decades, the industry faced raw material shortages, price hikes, increased lead times, and production shutdowns. 

Recent events did not soften the blow but gave rise to worldwide shortages of microprocessors, affecting supplies for hundreds of electronics manufacturers and giving rise to the term “chipageddon”. In a survey by IPC conducted in 2022, 90% of respondents paid more due to supply shortages.

So what can manufacturers do to tackle these disruptions? 

Manufacturers are finding creative ways to handle disruptions and avoid production stoppage. 

RESILIENT OPERATIONS

Manufacturers are eager to invest and accelerate their digital transformation in order to manage their logistics and supply chains and get better insights into their stock level and demands.

SUPPLIER SOURCING

Manufacturers concluded two alternatives that they can adopt. First, to use AI to evaluate their multiple suppliers and secure raw materials in a timely manner for continuous production. Second, to adopt a just-in-case model instead of a just-in-time, where they can rely on their own warehouses that were stocked with excess inventory. 

ORDER SIZE PRIORITIZATION

Electronics Manufacturing Services (EMS) companies are reorganizing and requesting their customers to prioritize orders. To improve their chances of securing needed components in the long run to avoid delivery delays. 

SIMULATIONS

Creating accurate simulations can help manufacturers gain visibility over their operations and improve their decision-making. 

Disruptions continue to be an unending cause of worry for the electronics industry. Incorporating these tactics when applicable can help the industry revive its finances and market share. Also, ensure smooth operations both domestically and internationally.