Original equipment manufacturers (OEMs) of electronics have traditionally lowered supply chain risks by keeping a tight rein on supplies of expensive components such as central processing units (CPU) and storage units such as semiconductor chips.
But the recent supply chain disruptions in all electronic components may indicate the need for OEMs to keep a closer eye on sourcing risks for simple, floor-level components, says Jennifer Strawn, vice president of sales and sourcing at Rand Technology.
Strawn has been a keen observer of the electronics components industry and the needs of Fortune 500 companies for more than 30 years. In her role at Rand Technology, which provides global sourcing and supply chain solutions, Strawn has seen more than her share of shifts in supply chain strategy.
“Just-in-time blew up in our faces,” she says, referring to the drastic disruptions of the last two years. She says new strategies are required for a new world of supply chain hiccups. “We are past a common shortage. We are into a shift. We gave up a lot of control when we outsourced, and now we’re two years into this market and the typical OEM is asking us every day: ‘When we look to our future, how are we going to change?’ Supply chain risk mitigation is absolutely on the table.”
Strawn says that some of Rand’s customers are clearly moving in the direction of keeping safety stock — maybe not a whole quarter’s worth, but some. They can also turn to companies such as Rand to facilitate spot buys to fill the gaps.
Another trend she’s seeing is there’s more talk about secondary sources and how to make the most of them. For example, electronics manufacturers can introduce more flexibility into their board designs, so they can use different components to make the same thing.
One of the first thing Strawn advises is to construct a “risk heat map,” by which companies can identify which components are at risk, especially when there’s no alternate source. It can be tricky to tease apart the different types of risk factors. For example, when analyzing lead times, it’s important to analyze not only the risk of delay but the actual reason for the delay.
Again, where OEMs in the past could remain low-risk by concentrating on expensive components considered critical, now they have to think about everything that goes into production, including raw materials, too. She says there’s a lot of talk in the electronics industry about creating semiconductor fabrication plants (FABs) closer to North American and European markets. “But there’s still the issue of raw materials; that’s something that has to be considered,” she says. “As we get into 2023, the issue with raw materials is going to be more apparent and have more of an impact.”
Rand also helps companies get more usage out of components such as hard drives via repair and re-use — something that’s gaining ground in the electronics industry of late. “We help with the whole circular ecosystem of their projects,” she says.
Strawn’s advice to companies is to review their whole sourcing strategy. “You need to be more modern in your thinking, and think about who you can best engage to help keep your manufacturing going, and your parts in line.” Unsurprisingly, she recommends a partner such as Rand for which the core business mission is keeping an eye on supply lines, and is an expert in all sectors and commodities in all regions.
“We’ve been tasked for 20 years to solve supply chain problems. We see ourselves as the true agility supply chain partner to the OEM,” she says. “It’s not just transactional tasks about how I can fill your shortage needs. It’s more about what are your supply chain challenges, and how can we help with them? We offer a range of different opportunities.”
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