The Impact of Electronic Component Shortages on Manufacturing: What You Need to Know

Component shortages continue to be an issue in electronic manufacturing. These shortages are often frustrating, as they can increase costs, delay your time to market, and necessitate design alterations. While component shortages will continue to have an impact on manufacturing, partnering with the right ECM can help you through the manufacturing process with as little an impact on the final product as possible.

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Causes of Electronic Component Shortages

Component shortages are not new. Disruptions in the supply chain, increased demand due to technological advancements, and manufacturing delays and closures have all contributed to the shortages. These causes can be overcome with time and sensible buying strategies, but the situation has not resolved as quickly as it could have because of the response of many companies. When components are in short supply, distributors encourage buyers not to overbuy, but nervous buyers, concerned that they’ll be left wanting, do just that, creating a stockpile for themselves of components they may not use, meanwhile making the overall issue of component shortages worse. Larger buyers who can afford to stockpile are putting more demand on an already strained supply, and smaller companies are often left struggling.

Impact on Manufacturing

Electronic component shortages are not only frustrating. They can have a real impact on the manufacturing process overall. Reduced availability of components can cause significant delays in production and delivery. This can result in increased costs, both from the higher cost of the component itself as well as a longer project lead time, and, in some cases, the need to redesign a product entirely due to unavailable components. When the prices are driven up, the costs are passed on to the end user, and that can create a frustrating situation for all parties.

Strategies for Dealing with Electronic Component Shortages

With electronic component shortages still present without any clear signs of improvement, there are strategies that can be used to handle the shortages that will still allow products to go through the manufacturing process and make it to market without significant delays or increased costs.

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  • Diversifying Suppliers and Supply Chain

Working with an ECM who has a network of vetted suppliers can help mitigate the component shortage by allowing options. When your ECM can diversify suppliers, the components are more likely to be obtained.

  • Forecasting and Planning for Future Needs

A proactive approach is the best way to deal with electronic component shortages. If you can plan ahead, you can either obtain what you need before the need is critical, or, if the component is not available, you can plan the design around components that are available. Waiting until the need is immediate will often result in frustration.

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  • Prioritizing Critical Components

When everything is critical, nothing is critical. Work with your ECM to prioritize which components need to be obtained first and proceed from there.

  • Collaboration and Communication with Suppliers and Customers

Don’t develop your product in a vacuum. Collaboration is key, and your ECM can help facilitate communication with all parties involved in your product design, development, and delivery.

Potential Solutions and Innovations to Address Shortages

Experienced electronic contract manufacturers (ECMs) can play a pivotal role in addressing component shortages by drawing on their extensive supply chain expertise. They can leverage their supplier networks to find alternative sources, recommend component substitutions or design optimizations to reduce reliance on scarce parts, and even facilitate custom component manufacturing when necessary. ECMs also offer risk mitigation strategies, advanced forecasting, inventory management, and cost negotiation to ensure the availability of critical components. Their ability to diversify suppliers, collaborate on demand forecasts, and coordinate communication among stakeholders further enhances their contribution to addressing component shortages and ensuring smooth production processes. Contact Levison Enterprises to learn more about our capabilities and how we can help you bring a better product to market.

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