Fluctuating economic and market conditions have altered the supply chain landscape forever. Rapid demand expansion, increased commodity prices, labor inflations, and shifting trade regulations are just a few variables creating turbulent times for electronics buyers, suppliers. and the customers they serve.
The fundamental dynamics of the electronics industry have changed too—and we need to change along with them or face potential business disruptions. Start by realizing “business as usual” has been replaced with a “new normal,” one that requires different strategies for building global supply chains that can withstand severe headwinds.
In mid-November, I attended Electronica where more than 80,000 attendees from over 50 countries convened to look, think, and talk about the electronics industry’s entire range of technologies, trends, products and solutions. Nearly every keynote, roundtable, and hallway discussion touched on how best to cope with unprecedented supply/demand imbalances.
Frankly, it felt like Deja Vu, since I’ve spent the past few years working in direct procurement and addressing successive waves of supply shortages, price hikes, and ever-lengthening component lead times. For components like capacitors, resistors and discretes, lead times have stretched up to 60 weeks. These lengthy delays continue to have lasting impacts on businesses’ ability to source parts and deliver products on budget and schedule.
Driven in part by an upswing in demand by the mobile, automotive, industrial, IoT, and data center markets, component shortages will continue to be a major factor. Another much-discussed topic at Electronica was keeping pace with demand for next-gen technologies, like IoT and 5G. As expected, there was lots of buzz around 5G as the next big wave to impact the global enterprise and consumer markets. Even with many industry pundits predicting widespread 5G deployment is still 12 to 18 months out, the effects of emerging technologies already are being felt across global supply chains.
Besides the surge in commodity prices, ever-rising labor expenses and shrinking labor pools are creating a ripple effect that’s extending beyond the electronics industry to impact all industry sectors. Even merger and acquisition activity has been taking a bigger role in reducing the supply base and parts availability across the globe.
Accelerated technology transitions also are triggering shortages, as component suppliers increasingly shift from legacy products to focus on supporting production of more advanced and higher-priced items. The rapid advancement and obsolescence of parts reflects the ongoing digital transformation of many businesses, which speeds lifecycle management and leads to an entirely new set of supply chain challenges.
In Jabil’s Current State of the Global Supply Chain video, we examine these and other polarizing market forces that are continuing to wreak havoc on traditional customer/supplier relationships. That’s why Jabil’s experts in supply chain, procurement and manufacturing from around the world are stepping up to offer strategic guidance and valuable market insights on how best to negotiate with suppliers and restore supply chain equilibrium.
Over the next few months, we’ll revisit the topic of navigating supply chain headwinds in an exclusive series on EBN. Each post will provide a deep dive into the various forces shaping today’s supply chains while offering pragmatic advice and real-world insights on addressing:
- Constrained supply, supply-based consolidations and increased commodity prices
- Increased labor costs/shortages
- Demand expansion/rapid technology transitions
Please join us on this informative journey as we rethink and reshape current supply chain approaches to chart a course for more effective supply chain orchestration in the new normal.