Industries reliant on electronics for their products are partnering with top OEMs to source raw electronic components in line with customer demand.

In our article on 16^th July 2021, we discussed the solidification of the global semiconductor shortage, the extended lead-time on supply and the ongoing impact this is having on businesses worldwide.

These shortages, coupled with high demand & challenges related to shipping mean B2B tech companies such as security, communications, medical and defense providers need a hardware plan to maintain a product pipeline.

We have long-term and new clients working with us formulating tailormade strategies to mitigate the very real risks this component shortage brings as demands show no sign of slowing down.

Situation update.

• There has never been a greater demand for materials or a greater competition to secure them
• Supply and demand forces are driving the price inflation of Tier 2 suppliers
• Pricing variations and partial deliveries are now commonplace and without warning
• Insufficient shipping availability is resulting in expedited freight charges
• Forecasts are extending further into the future and clients are taking a positive position on forward orders. As a result, we can communicate our needs ahead of schedule regarding extended lead-times for materials

Extel can help extend forecasting and leverage our relationships with over 600 suppliers to benefit your product pipeline.

Collaboration between procurement, engineering and OEM.

• This activity is crucial to maintain the flow of your product lifecycle
• With open channels of communication between divisions such as procurement and engineering, and sharing as much information as possible with manufacturers, we can stay flexible with product enhancements or procurement strategies without compromising IP
• Clients re-visiting design can explore innovative ways to solve component shortages or find substitute components through design and engineering
• Supply of key components can be secured prior to finalizing the design of the next generation or updates to the current product

With the depth and breadth of our industry knowledge and our ability to adapt on short notice, we can bring new ideas to product challenges and offer nimble, efficient solutions.

Enhanced manufacturing strategies.

• Lean manufacturing and JIT have always been promoted by Extel, however, we recommend discussing effective manufacturing strategies in response to the current global shortage
• Building to forecast and delivering to order is made possible by amended manufacturing strategies to support this market crisis
• By buffering your stocks at the component level, at sub-assemblies or finished goods, you can create a safety net of product inventory
• In contrast to having to push out delivery deadlines with your customers weeks or months in advance, storage and advance building allow you to fulfill more orders and generate revenue

Extel provides clients with warehousing and logistics services in order to stock components and products in advance.

Our takeaway message.

The global component and freight shortage aren’t improving, and we need to do things differently to increase the certainty of supply. The outlook for businesses dependent on electronic components for product supply remains uncertain and is expected to last into 2023.

To learn how we can help you plan according to market demand and increase the certainty of your production line, please contact us today or reach out to a team member directly:

[email protected] – Chief Business Officer

[email protected] – Director Business Development

[email protected] – National Sales Manager

[email protected] – Business Development Manager