The semiconductor supply chain squeeze has been tough on OEM customers – tougher on some than others. With lead times stretched out to the extreme, and no end on the short-term horizon, creativity, in-depth knowledge and the right relationships are the name of the game.
If, for example, you look at mid-range companies, where they don’t have a deep bench procurement team and they might sell lower-volume, higher- priced assemblies/systems, the past few years have been an experience like no other. Companies like that don’t have the bandwidth to partner with 15-plus different semiconductor companies to assure a steady supply of parts, nor do they have the resources to support those relationships. They are looking for a solution from a partner that can solve their supply problems. They need to solve problems at the system level. These companies are in a bit of a bind; their volumes are not high enough to go direct through a semiconductor manufacturer and they are not at the highest volume to be distribution MVPs either. Instead, they are relying more on specialized distributors because their $1 million to $5 million spend can go further.
Look closer at their traditional buyer procurement team and their buying experience. If you have a list of 200 different semiconductors that you need to buy for your engineering or manufacturing teams, and, in today’s environment, 50 percent of them are difficult to find or not available from your traditional procurement methods – right out of the gate, these procurement teams are completely overwhelmed. They are simply not set up to source that many difficult-to-find semiconductors. And, if you consider that each of those semiconductors requires its own separate investigation/analysis, that’s going to take a few days.
When you have 50 or 100 of these parts to find, it can get quickly overwhelming – and that’s been the state of procurement for a lot of organizations for the past few years. And while automotive and consumer applications have made headlines, with cars parked waiting for semiconductor chips to make them complete — the problem is just as daunting, if not more, for industries like aerospace, defense, medical and industrial where components are designed for the long term, often with 10- or 20-year product life cycles. When you can’t find parts for planes, military systems or medical devices; or if a chip goes EOL on a design, their procurement departments face a “Where’s Waldo?” scenario trying to track down elusive, mature technologies.
So, what can these teams do? Consider expanding your buying relationships, beyond the broadline distribution model and consider partnering with specialized distributors that deal with harder to find semiconductors. We no longer live in a world where you can go to a website and order what you need. It’s really a world where you need those valued partnerships; and look at what alternatives could exist in the marketplace. That partnership could very well be the difference between not finishing the system that you’re wanting to finish and completing it.
What I think should be avoided is going on to the gray market to secure material that is not traceable — the risks here are clear and outweigh any kind of benefit in getting parts that potentially are not what they’re represented to be.
Spend time and resources and investing in your forecast as well, and place orders with much more lead time than you have ever done in the past. It helps. We’re in this for a while yet, and the more planning we can do, the more it benefits all partners in the supply chain.