The Supply Chain Shortage Is Having Very Real Effects
When Elon Musk speaks, he usually draws attention. This time is no different. When asked about the reason for recent price increases in Teslas, his response gave an acute look into the state of the electronic component supply chain shortage and the consequences it might have for manufacturers and consumers.
According to a May 31st Twitter post, Musk cited that the price increases were “due to major supply chain price pressure industry-wide. Raw Materials especially.” A recent tracking study from Electrek has found that the cost of a Tesla Standard Range Plus version of the Model 3 has increased in price from $36,990.00 in February to $39,990.00 in May. The Model Y Long Range AWD version, meanwhile, has risen from $49,990.00 to $51,990.00.
Such raw material trends extend are not restricted to Tesla, or even the electric vehicle industry. Boston retailer Yale Appliances, for example, recently warned in a New York Post article that appliance prices by major brands from GE to Whirlpool could rise by 2.5% to 10% in the coming months, with no relief in sight until at least 2023. Grocery prices have increased an estimated 3.5% from last year, and even the cost of new houses has increased approximately $24,000 due to the increased cost of lumber. Even baby products such as diapers, according to Procter & Gamble, are anticipated to rise in price by September.
The scarcity of raw materials makes it a perilous time to be a manufacturer, which is particularly ironic considering markets across the world are expected to boom as the COVID-19 pandemic continues to wane. This is especially true for manufacturers tasked with sourcing critical electronic inventory such as chips and components for their product designs. In order to successfully navigate such a market without running into inflated prices, prolonged lead times, and potentially costly redesigns, manufacturers today should now more than ever consider investing in a BOM monitoring strategy.
With Partstat BOM Monitoring, for example, you get instant access to over 50 billion data points from thousands of manufacturers and authorized distributors that provide real-time obsolescence monitoring of every electronic component or semiconductor on your bill of material. The instant our platform detects a change in lifecycle status, the customer will be notified with the option of making a last time buy, which Partstat will complete on the customer’s behalf using our own working capital. At any point, the customer can dig into each individual component from their online dashboard and view lifecycle analysis charts, trending graphs, and lifecycle reports in order to make a decision that is best for their particular situation.
Most importantly, however, BOM Monitoring will not only help manufacturers navigate this market, but also mitigate such risks for any future market volatility. Without the information one of these platforms provides, manufacturers will only be able to make reactionary decisions as opposed to proactive ones. That can be the difference between completing a product lifecycle and a premature discontinuation at significant cost.