New Data Reveals Depths of Supply Chain Crisis
The modern supply chain is in a crisis. Although supply chain disruptions occur in some form annually, and major disruptions occur in cycles at least every few years, 2021 is proving to be a different beast. Inflation, raw materials shortages, port congestion, political tensions within nations that constitute critical pain points for critical electronic component supply, and complex COVID-19 protocols have all played a part in what might be called a “perfect storm” of a supply chain crisis.
These issues are far from simple talking points. The results of these issues can be directly seen in the data compiled from authorized distributors around the world. Below is a brief list of just some of the part numbers that illustrate just how dire the current situation is. This data comes curtesy of Partstat’s BOM Monitoring platform, which 50 billion data points on current lead time, price, and quantity from thousands of component manufacturers and authorized distributors, and is fully available to all with the creation of free Partstat account.
Arguably the most striking observation seen is the discrepancy in lead times from today versus 12 months ago. Part # LC823450XDTBG, for example, in just a 12-month span has seen lead times balloon from four weeks to 48 weeks. Additionally, inventory quantities for this part have almost completely dissipated, with reported number fallen to under 1,000 from nearly 200,000 just 12 months ago.
Part # STM32F405RGT6 has seen equally precarious misfortunes. With an inventory quantity nearly 60,000 12 months ago, the total number is now only 43. Lead times increased have proportionally increased just as much, which are currently at 49 weeks as opposed to 14 just 12 months ago.
This is but a small sample size of what Partstat’s data has been seeing in recent months. Component manufacturers and authorized distributors alike are currently caught in a concerning spiral of delays and shortages that many analysts anticipate may not recede until 2023 or even beyond. Some have even started to call the current situation a “new normal”, which despite current uncertainty implies that the supply chain as we know it may never revert back to its previous form — for better and for worse.
This means that manufacturers that have long relied on traditional, “tried and true” models to maintain production schedules are, first the first time in decades, a going to have to rethink nearly every aspect of their supply chains. A year-and-a-half into the COVID-19 pandemic, simply waiting for lead times, prices, and inventory quantities to stabilize is no longer an option. Manufacturers today need to fundamentally rethink their approach to inventory.
Partstat Inventory Ownership Solutions are a good place to start. By allowing Partstat to purchase all the inventory you require as a single bulk purchase or last time buy at the beginning of the production process, you:
• Preserve working capital
• Improve cash flow
• Eliminate lead times, and
• Mitigate future price inflation
All Partstat customers realize these benefits, all while avoiding disruptions that can result in costly redesigns. Additionally, Partstat Inventory Ownership Solution customers save an average of 42% in annual carrying costs.
These are all benefits to using an Inventory Ownership Solutions, but in the “new normal,” such a solution is the only way to truly avoid today’s disruptions while guaranteeing business continuity. It’s time to modernize your supply chain.