I love the solitude of being out in the mountains. When you’re miles away from civilization and thousands of feet above sea level, my mind stops racing, and I can simply admire the beauty of my surroundings. Unfortunately, this solitude comes at a price. Some of the most desirable backpacking spots in the U.S. severely restrict reservations to maintain this sense of seclusion. For one of the premier backpacking spots, I spent weeks planning a route only to miss out on reservations within 15 minutes of availability. Better luck next year!
Manufacturers, however, can’t afford turnaround times of up to a year. But electronic component shortage durations for some parts have extended to this range and even beyond. While the supply chain is recovering from a global pandemic and government responses, PCB manufacturers have had to alter and expand component procurement strategies. Due to excessive lead times and escalating component prices, partnering with a CM that provides materials management and engineering services can help design teams maneuver the shortage as global production continues to ramp up.
Factors Leading to Current Electronic Component Shortages
Electronic component shortages are nothing new. They are a normal part of the supply-demand oscillation. Typically, market forces result in temporary shortages and moderate price hikes that alleviate once the demand can surpass supply once more. These short-lived shortages create opportunities for other manufacturers to move into vacated market space and establish themselves.
However, the supply chain disruption of 2020 was so thorough and long-lasting that its reverberations are still being felt today. With partial and complete shutdowns of manufacturing facilities as outbreaks persisted, suppliers could only watch as component stocks were whittled away.
These shutdowns alone wouldn’t lead to the industry’s current state, but stay-at-home orders necessitated a surge in device purchases for remote work and school. Coupled with pent-up purchasing power with little access to services, a wave of demand for electronic devices soon began eating into component supplies from the other end. This supplemented the ongoing demand for new electronic devices and quickly led to dwindling component availability.
In rectifying this situation, component manufacturers are switching their production lines away from their standard parts to manufacture newer, more profitable parts in high demand. While this has shored up some areas of the supply crisis, it has also continued to limit the stock of more standard parts, resulting in extended lead times and higher prices. As a result, PCB designers find that some of the standard parts they’ve had at their fingertips are now more difficult to obtain, while design alterations to accommodate part availability have become increasingly common.
How Contract Manufacturers Guide Design Teams Through Electronic Component Shortages
A contract manufacturer (CM) will alleviate the frustration of trying to source components alone during this time and the cycle of part scarcity driving design. With a finger on the pulse of the industry during assembly production, an experienced CM can rely on industry ties forged over decades and bulk purchasing power to aid in procurement. This is especially useful during extended periods of part allocation by manufacturers requiring assemblers to build piecemeal inventory to prevent larger firms from buying out available stock.
An effective CM will help overcome the worst effects of the electronic component shortage with effective planning and proactive approaches:
- Maintaining critical stock: CMs will stock up on critical parts with longer lead times so that the production runs of your boards are less affected by shortages.
- Cultivate relationships: As a bulk purchaser, a CM will have developed strong relationships with component manufacturing, enabling the best per-part prices and shortest lead times on orders.
- Build inventory: A CM with foresight will be able to purchase parts in advance of application demand and carry excess component inventory, knowing that they will be returning to their stock for future assemblies.
- Synergizing design with market availability: CMs with engineering know-how can leverage their position to evaluate designs before entering into production. During these reviews, CMs can spot possible pain points in the schematic or BoM and recommend alternate or replacement parts before production, avoiding costly redesign time and labor.
Your CM Will Push Through Procurement Challenges
Developing a trusted relationship with a CM is critical to creating your electronic designs. Not only will they get you through this current electronic component shortage, but they also provide many other key PCB services that will help ensure that the electronic assemblies you design will be built how you intended.
At VSE, we’re a team of engineers committed to building electronics for our customers, and that includes handling any rampant sourcing issues as the supply chain builds back to full strength. We’ve established relationships with component vendors so that parts integral to designs will be available at a reasonable cost, allowing design teams to focus on what they do best. Coupled with our professional manufacturing partners, we strive to deliver the highest quality PCBs while mitigating delays due to industry trends that affect your bottom line.