After so many supply chain and logistics challenges since the start of the COVID-19 pandemic, we’ve seen numerous headlines proclaiming a new era of reshoring and the end of lean production and just-in-time manufacturing strategies.
It’s natural that all the disruptions and challenges we’ve faced since early 2020 would make both manufacturers and consumers of electronics concerned about the future. Even so, this is a situation that demands not drastic reactions or dramatic changes, but long-term strategic thinking.
There is no “magic wand” to overcome current uncertainty and prevent future disruptions because there’s no single cause of the issues impacting electronic components suppliers, OEMs, and ODMs. Recent experiences with high demand for raw materials, shipping disruptions, labor shortages, and price increases have led some experts to say we can’t have both just-in-time manufacturing and long-term confidence in our supply chains. The reality is that franchised electronic components distributors have been delivering both of these for decades.
The “Perfect” Supply Chain
In good times and in challenging times, supply chains run best when all the stakeholders involved stay keenly focused on their core competencies. Doing so won’t eliminate uncertainty altogether but it will help the supply chain as a whole come through these challenges more quickly and with more benefits to all concerned.
Electronic components distributors help manufacturers reduce their inventory expenses and help them deliver the benefits of the distributor’s material management expertise in addition to near-term cost savings. These are the distributor’s core competencies that are put into practice with a team of supply chain experts who have deep industry knowledge as well as supply chain acumen.
A supply chain that always runs — there's simply no such thing. While we strive for perfection, excellence is the ideal outcome for which we should strive. While we can't anticipate or eliminate every possible source of disruption, we can partner to build a resilient supply chain that is founded on trust, visibility, candor, and transparency.
For example, while we can't always anticipate the unknown (such as a new virus that sparks a global pandemic), we can learn from historical challenges that include not only COVID-19 but also single-source dependence, fires, and other natural disasters. These lessons will reveal and define new methodologies, processes, and tools to protect against disruption in the future.
On the other hand, redundancy and protection from risk must be balanced with the ability to conduct business cost-effectively — and it’s for this reason that rumors of just-in-time’s death in 2021 were greatly exaggerated. “Supply chain resiliency” doesn’t need to take the form of additional inventory at manufacturing locations, nor does it require moving operations from one country to another. While this may seem to provide a short-term solution, over the long term, the network of global interdependence that we have created calls for a more measured, evolutionary approach to ensuring supply chain stability.
Technology gives us the ability to add efficiency to the supply chain without sacrificing the advantages of lean and agile practices. API implementation and other machine-to-machine communications links deliver a higher level of speed and visibility into the supply chain.
AI will also help shape future business decisions and identify patterns that could help avoid disruption. After all, “big data” only becomes valuable data when it leads to more actionable insights.
In addition, this data can highlight the potential value of difficult decisions such as knowing when to adjust manufacturing lead times. Again, having access to market data and insights from a distributor partner can provide the knowledge to make those decisions, and the assurance of knowing that you’ll be putting your business on a firmer footing.
Distributors as Vital Partners
The pandemic accelerated digital transformation and automation across many industries. Today, B2C standards are redefining B2B expectations. Even so, there is still no match for human knowledge and insight in decision-making. As a distributor, our model allows us to be more flexible and to take a longer-term strategic view informed by industry data and knowledge. Choosing a distribution partner with specialized knowledge and a proven model provides subject matter expertise that can illuminate your decision-making process, down to the impact of raw material pricing on manufacturing at the component level.
The more uncertainty that exists in market conditions, the more certain you have to be of your partners and strategy. Thanks to decades spent building an interconnected, agile supply chain, we cannot easily unwind just-in-time manufacturing — nor should we. By focusing on our core competencies, we create value for the end customer at a reasonable price.
While current disruptions and the danger of future threats make it tempting to seek short-term solutions, the better approach is to strengthen your relationships throughout the supply chain. Building strong partnerships, especially with a components distributor, gives you the intelligence required to maintain an agile strategy for 2022 and for years to come.
This article was written by Tom Vanderheyden, Senior Vice President, supply chain and sales enablement, TTI Americas (Fort Worth, TX). For more information, visit here .