When Component Shortage Fails You…
Here we are, in the second half of 2021, yet changes over the past year have settled into a “new normal” that affects how business is conducted. One of the most heavily involved industries is electronic manufacturing, specifically the component shortage associated with Printed Circuit Board Assembly.
Yes, we have entered the recovery stage of the pandemic, but we are now in “Crisis Mode” as a manufacturing industry. So let’s go over a few of the most significant problems facing productivity today:
- Long component lead times.
The average lead time for a manufacturing project has become much longer in the past several months. From order to delivery, suppliers and customers are waiting on their heels weeks later than anticipated.
- Sky-rocketing prices.
Individual components have become rare, and therefore expensive. Expect to lighten the wallet when it comes to ongoing production.
- Disruptions in project completion.
Somebody get the manufacturing industry a cold glass of water…because it has hiccups. Each stage brings pauses to the overall goal of completing a project.
How did we get here?
These problems occur based on many overlapping issues with stocking, shipping, building, receiving, and general bad luck.
Focusing specifically on PCB Assembly, both US-based manufacturing and off-shore counterparts, such as China, suffer due to the raised cost of raw materials and the employee deficit caused by Covid-19.
In a greater scope, there have been political tensions and shifting trade agreements. The US and China have been in a boxing match, implementing tariffs on both sides.
Additionally, automotive manufacturing has been forced to dip into materials traditionally left for other markets, leaving limited supplies for the rest of the industry than before the pandemic.
Even before last year’s events, the demand for electronic components has constantly been rising, with smartphones and new automotive electronic capabilities, and most manufacturers can’t keep up with the demand.
Here’s How to Succeed!
How can you work with the grain and succeed?
So now, if you’re reading this, you want to know how to avoid complications in the component shortage, and we want to help. Here are the three basic steps to consider regarding your ongoing or upcoming projects at this time:
1) Forecast sales cycles.
2) Identify long lead-time components.
3) Buy and stock now.
These three steps may seem very simple; however, their impact can differentiate between massive success and grand failure.
STEP ONE: Review and Forecast
Before you start to panic, take the time to review your regular sales cycles and forecast future actions. Use this point in the planning period to project the growing changes; this action will keep you from getting caught off-guard. In this case, doubling forecasted cycles will help with the final step. If you usually plan for a 3-month reorder period, project for 6 months instead. Stay one step ahead, always!
To ease this restructuring, coordinate with your supplier for updates on high-demand periods and blockages. They are here to aid your experience with the transparency of facts, not to make false promises.
STEP TWO: Identify Problem Areas
Once you have laid out the plans, identify the trouble-making components with the long turnaround times. This process means that as soon as you have identified the right time to order, place all necessary orders for each component immediately. This step is more easily said than done, as most components have acquired long lead times, but the best way to prepare is to diagnose all potential headaches.
If the long lead-time components are the headaches, then discussions with your supplier are the Tylenol. They know what materials are available and which ones need your immediate attention, so swallow up the advice and lessen your chances for a future migraine!
STEP THREE: Stock, Stock, and Stock
By this point, you are best friends with your manufacturer and will discuss the desire to stock components for future projects. We recognize that it is a seller’s market, so this action allows some peace of mind and control. In addition, you will have the ability to preemptively store components projected to have very long, unstable lead times, so grab all the material you can!
We are aware that this action contradicts the established norm that typically calls for low inventory and just-in-time ordering, but as stated above, we are in a “new normal.” The best move for your company is to spend the cash at the start and prepare for the worst.
The PGF Advantage
PGF Technology Group is a partner in helping you succeed despite the current trends.
While specializing in the assembly of printed circuit boards, cables, wire harnesses, box-builds, and prototype applications, we pride ourselves on the pledge to put our customers first, treat our team as a family, and constantly innovate.
We bring a personalized approach to our customers and guarantee honest feedback at every stage of a project. In a nutshell: we are here for you, whether during a component shortage or otherwise!
For any project you may have, contact us and let us prove why we are your solutions provider.