Why the Electronic Manufacturing Supply Chain is So Complex

Article Reposted from EPSNews.com

The complexity of global supply chains depends largely on what and how much you’re sourcing.  With some materials — like paper — you’ll find a suitable supplier almost anywhere in the world.

However, in the electronics industry, things are not so straightforward.  Multiple commodities from multiple suppliers across various geographic locations mean global electronics supply chains are much trickier to manage.

One of the main challenges of electronics is the sheer volume of parts that go into one product.  Some of these parts also need to have approvals, and suppliers will require certain certifications.  Bespoke parts are often manufactured to specific designs, too — meaning rigorous testing and sampling are necessary to ensure they meet meticulous quality standards.

Why is a stable supply chain so important?

A good supply chain is all about remaining competitive.  If a customer comes to you wanting a specific part for a project, you need to know that you can deliver through a trusted chain of suppliers.  As such, having a range of approved global suppliers is key to ensuring you never have to reject new enquiries.

A strong network of suppliers also allows you to free up capacity and manufacture a range of products more cost-effectively (and at short notice) — which, ultimately, translates to a better price for the customer.  This is why so many companies in the electronics sector will have at least some offshore suppliers.

However, supplier selection is crucial. It’s not enough to have a good website or a good booth at an exhibition — you need to see the factory and the quality of the parts they produce first-hand.  When customers place orders, you need to know exactly where their products are coming from.

It’s also important not to cast the net too wide.  Once suppliers are spread out too far, the chain becomes more difficult to manage, and you lose control of where the materials come from.  Instead, it’s crucial to build long-term partnerships with suppliers that share and uphold your ethos, integrating them into your business to ensure a fluid process.

What is the impact of external factors?

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Solutions to Avoid Disruptions in the Electronic Component Supply Chain

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Your business depends on a fluid and consistent supply chain. Without an efficient supply chain and timely availability of parts, your business growth and profitability are at risk. This past year the electronic component supply chain has been hit by a number of disruptive events, some of which could not be foreseen or controlled. A few of these notable events were;

  • First, an earthquake, in an important semiconductor region of Japan, greatly effected production at Renesas Semiconductor, Sony Semiconductor, and Mitsubishi facilities
  • Also, a cluster of quality issues at Amphenol Aerospace caused the company to halt distribution of many products as well as lay off over 90 people.
  • Additionally, one of the industries largest distributors, Avnet, struggled with the implementation of their new ERP system, causing them to delay shipments and double ship orders, which contributed to a cycle of other negative consequences.

As you may have experienced the repercussions of these few events first hand, or others like them, you know the impact it can have on your business. However, there are a number of ways to prepare for disruptions in the supply chain prior to an event. The smartest way to minimize disruption is to pre-prepare your contingency options for sourcing alternative materials. Doing your research by interviewing reliable alternative materials providers could be the difference between continued up time or a manufacturing disaster. Then begin to build partnerships with your emergency supply chain resource partners and proactively create contingency plan scenarios if resource needs were to arise.

When picking an electronic components supply partner, it’s critical to evaluate a few aspects of their business. Consider the time they have spent in their industry. It is important that the organization has years of experience solving nearly any type of supply chain crisis or disruption? Also, investigate their quality system by performing an audit.  Many of the alternative sources are not souring their parts from the manufacturer directly, therefore it is essential that you understand their quality processes. Make sure to take a close look at their counterfeit mitigation plan, as a counterfeit would lead to even worse circumstances than a lack of supply. Ideally a supplier would be certified to the AS6081 counterfeit avoidance standard in order to give you peace of mind. Lastly, ensure they are able to source and deliver in a timely manner. Some of the most reputable suppliers have multiple offices around the globe to maximize the availability and speed of delivery to key partners in critical need.

So with prior planning and proper vetting of supply chain partners, manufacturing down time can be minimized, or even avoided. Naturally, the less down time, the more profitable and efficient your manufacturing operation can be. The end result will be a stellar business reputation and a satisfied executive management team. Investigate those potential partners and put your plans in place to secure your production line.