Causes of Electronics Components Shortages and How to Avoid Them

Every boy scout knows the motto: “Be Prepared.” This holds true for more than just wilderness excursions. If you are in the market for manufacturing, you need to be prepared for any potential obstacle and have a contingency plan, or run the risk of being faced with difficult decisions and lost opportunities or sales.

Current state of electronics component shortages

This past year has seen an exponential increase in demand for electronic components resulting in the largest epidemic of component shortages across supply chains since 2010. Some industry experts are concerned this year’s imbalance of demand and supply could be the most severe of the century. Currently, lead-times for supplies are stretching to more than 30 weeks. There’s no short-term relief ahead for electronics manufacturers who are scrambling for components given this deficiency is now projected to last through 2018—longer than industry experts expected. The result is that in some cases component deliveries won’t be available until well into 2019.

Why is there a shortage for electronics manufacturers?

Reporters have identified several different reasons for the shortages, including higher-than-expected demand, raw materials supply, and capacity issues on the manufacturers side. Much of the unexpected demand stems from the upward growth of key market segments including consumer, industrial, and automotive sectors. But, component shortages are not just about increased demand. Any number of factors?production capacity, supply chain disruptions, obsolescence, and technology migration?can contribute to product scarcity, so the occurrences can rarely be predicted, yet the ramifications clearly have an effect.

What happens when there is a components shortage that affects my electronics manufacturing?

A common outcome when supplies are tight is that the big and strategic customers move to the front of the line. However, this particular situation is resulting in suppliers not only turning away new business, but established and longtime customers are now feeling the pinch.

How can I avoid the pitfalls of electronics shortages?

With demand for components increasing and shortages continuing to plague the marketplace, additional up-front planning is necessary to ensure you are still able to meet your design schedules and product timelines. One of the best ways to be prepared is to monitor trends currently happening within the electronics industry. Another way to cope is to broaden your approved vendors list (AVL). This gives you and your contract manufacturer flexibility in procuring parts from alternate sources, especially when the shortage exists primarily with one manufacturer. Working with a full-service electronics manufacturing services provider who knows the entire scope, supply list, and the components of your project can help you be aware of and prepared for such eventualities?and often provide solutions.

At ACDi, we have a proven track record of planning for any contingency; supporting and fulfilling our client’s needs with a creative and networked sourcing team; a substantial in-house inventory; and the ability to monitor global markets in real time. We also have the tools and ability to cross hard-to-get parts to other, more available manufacturers. Contact ACDi today to learn more about how we can help you with a turnkey solution for electronics procurement during any market conditions.