Post-Pandemic, OEMs Will Rely on BOM Monitoring to Diversify Their Supply Chains
The COVID-19 pandemic has been and will long be looked at as a historic turning point for supply chain management. It’s not every day that businesses experience such a clear and impactful notice of their shortcomings. Although they may seem difficult to overcome at the outset, these disruptions will ultimately, in turn, lead to better, more flexible, more resilient supply chains.
Make no mistake about it; although signs of recovery have been shown, the electronics manufacturing industry was hit extremely hard by the pandemic. According to a study by Wakefield Research, the semiconductor industry alone dropped its worldwide revenue expectations by as much as 20% in 2020, while equipment manufacturers had to accept significant losses while also considering mass layoffs and factory closings.
This doesn’t even factor in the stress the global supply chain is experiencing regarding the ongoing trade tensions between the US and China that predate the pandemic. “China tariffs…are wreaking havoc with supply chains and costs,” noted one computer and electronics product manufacturer in an interview with EBN Online in a July 2019 article. “The situation is crazy, driving a huge amount of work [and] costs, as well as potential supply disruptions.”
In order to see any degree of market recovery in the short term, drastic steps are required. One such way supply chains will become better is through the diversification of their suppliers. Becoming too focused on one supplier, especially one based in a location whose access could become impacted by a globalized event such as COVID-19 lockdowns, is an inherent risk that could be easily overlooked should the market be in a positive trend.
For example, during the early days of the pandemic, many stateside equipment manufactures found themselves at an impasse following the ceasing of Chinese component shipments, unable to easily alter their production schedules as they re-entered a rapidly shrinking seller’s market. If there is something the pandemic has taught the industry, it is that it’s critical for manufacturers to take on the responsibility of tracking the market for each component on their bill of material. This includes having a firm understanding of average component prices and inventory quantities, as well as lead times. Regularly tracking of such figures and regularly adapting to find alternative suppliers is a key feature of the post-COVID supply chain, and solutions such as Partstat BOM Monitoring allow manufacturers to do just that and fill out a Rapid RFQ, place an order, or even let us initiate a last time buy for them as needed with minimal disruption.
Only through such a tool or solution can an OEM take full advantage of a global marketplace, interact with it on their own terms, and not be siloed in to a short list of suppliers — leaving the buyer dangerously exposed to market disruptions. It will be some time before the industry can be declared fully “recovered,” but the lessons learned through this arduous time will lead to a more secure and financially successful future for all.