How Electronics Manufacturing Parts Shortages Will Affect Production

The current electronics parts shortages are occurring primarily because of the recovering economy. The supply chain hasn’t quite caught up with the demand being created in the electronics manufacturing industry. Even one of the simplest parts we procure, monolithic ceramic capacitors (MLCCs), are highly constrained. These capacitors are typically treated as a commodity, like oil, gas, or pork bellies – you don’t expect to run into shortages because availability was never a problem. Recently however, manufacturers lack production capacity to meet demand of even these simplest devices.

Partnering with a Well-Respected Electronics Manufacturing Services Provider Matters

The current constraint and the supply chain’s inability to source components has manufacturers allocating this material. In a normal distribution sales environment, distributors sell to customers on a first- come, first-serve basis. The first orders placed are the first supplied. In a manufacturer allocation environment, the manufactures instruct distribution to whom the allocated parts are delivered, regardless of purchase order timeliness. These allocations are based mostly on your history of procuring this material and the amount you have procured in the past. New customers to the table are the last to receive an allocation. If companies like ACDi don’t have orders in place or have a history of procuring similar components, then they have a lower chance of getting an allocation. What used to be a stock to 16-18 week manufacturing lead time turns into 52 weeks and in some cases longer.

Advanced Automobiles are in High Demand

The increase of embedded electronics in automobiles has also created a strain on the electronics supply change. With the proliferation of flat screen displays, navigation systems, entertainment systems, USB and Bluetooth interfacing with handheld electronic devices, control systems for both internal combustions and electric vehicle propulsion have dramatically increased usage of electronic components. Where 5 years ago, the average car would use between 2-3k capacitors, they now use, on average, 10-12k of the MLCCs.

Also contributing to the shortage in the commercial market, is the reliability and temperature range requirements of the components needed for automobiles. These components, mostly the same as used in the commercial market (but screened to tighter specifications), are sold at higher price points into the automobile market.  This leaves electronic contract manufacturers scrambling trying to find capacitors anywhere in the world, in a growing number of cases, outside of normal distribution channels.

How Contract Electronics Manufacturers like ACDi are Handling the Shortage

ACDi is able to weather the shortages through strong relationships with major distributors that have been supplying us with components for years. Experience and industry knowledge allow ACDi to leverage their current relationships to cover a great deal of would-be shortages for a variety of products.

ACDi also harnesses their internal technical capabilities to cross check many of the components that are coming up short to other vendors or suppliers part numbers. If they run across an AVL (approved vendor list) that says the part is a Kemet, we try to cross it into an AVX, Murata, Panasonic, or some of these other manufacturers where there might be availability of the components.

What Should Companies Do That Have Upcoming Manufacturing Projects?

Plan and purchase. Get something on order as soon as possible. Try to get a material bond in place with your suppliers if you have a relationship with them. If not, get in contact with your electronics contract manufacturer and put a bill of material (BOM) in place so you can start exercising the supply chain and find your material problems. Open your AVL to as many manufacturers as possible. The increased breadth of options will help mitigate potential shortages of a particular manufacturer. Sole source components at your own peril! In procurement, it is always the more sources, the merrier the buyer (and the more content the customer).

If you are ready to start manufacturing, contact us today to speak with one of our experts.