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Supply Chain Electronics Manufacturing Relief Post-Covid Part I

There have been many events that affected the supply chain of electronics goods and electronics manufacturing in the US and other parts of the world. Examples include the South Korea Hynix fire, the Suez Canal blockage, the Japan 2011 tsunami, the current China-Taiwan tensions and of course the Covid-19 pandemic.

Thankfully, the electronics industry is resilient. Once such events are over, an electronics manufacturing supply chain relief will follow and production will resume.

But will the next supply chain disruption brought upon by some major event? Will it allow for another electronics manufacturing supply chain relief? How long would that be? What lessons has the US Electronics Manufacturing industry learned from events such as the Covid-19 pandemic? Are these lessons valuable enough to prepare the industry for the next disruption?

Covid Supply Chain Issues

The obvious issue that the electronics industry all over the world faced during the pandemic was the sudden shortage of computing and entertainment electronics and their associated consumables. There was a sudden demand for computing equipment for schools, businesses and individuals. People were forced to work and study from home. Gaming consoles and equipment demand also skyrocketed. These were followed by demand for related components and accessories.

With everyone in lockdown, production in most industries including the US Electronics Manufacturing industry have been affected. This continues as pandemic restrictions continue depending on areas with resurging infections and lockdowns.

One lesson learned by electronics manufacturing companies is to diversify geographically by investing in manufacturing operations in other countries. One country may be in lockdown, but other operations can continue to produce electronic components. This also means sourcing components from suppliers of other countries.

Lessons Learned from Pandemic

Another lesson from the pandemic is improving logistics and warehousing. This is what Amazon did. They expanded its fleet of vehicles and growing its number of warehouses. Something that large electronics companies can take advantage of, though is expansion. This is inevitable. Especially, given the new and expanded online purchase and delivery culture that resulted from the pandemic.

Then there’s the just in time manufacturing mentality creating products only to meet demand and not in advance to meet perceived needs. This is a cost cutting measure to keep standing inventories low to prevent overproduction, but also results in shortages when demand is not properly anticipated. The industry can always keep an inventory of evergreen components which can remain viable for years.

Such an inventory will result in electronics manufacturing supply chain relief in case another crisis affecting the electronics industry rears its head. The COVID-19 pandemic has urged the industry to rethink this mentality. And the public even had to resort to reuse older equipment due to shortages in the market. It’s a massive case of missed opportunity for everyone in the electronics industry, both manufacturers and retailers.

Importance of Relationships

Maintaining good supplier-manufacturer relationships is also an important lesson learned during the pandemic. This is somewhat related to the previous lesson wherein products and services are created only when needed. Suppliers are only contracted when required for certain products and let go when no longer needed.

These suppliers however tend to be flexible in the electronics industry, capable of adapting their production such as custom PCBs and chip fabrication. Electronics manufacturers can maintain their suppliers by diversifying their orders and maintaining their relationship and reordering the usual when it counts.

As the electronics industry becomes more cutthroat, for example with the current chip shortage, manufacturers need as many suppliers in their chains as possible. Suppliers are quick to go to anyone that requires them. Former clients will have to wait once production slots are full.

Dependence on Electronics Affects Supply Chain

And lastly, realizing that the world has become irreversibly electronics dependent, meaning that demand is somewhat consistent for semiconductors. Electronics manufacturers need to be on their toes. They need to anticipate demand, maintain supplier relationships, maintain a network of warehouses, and maintain an inventory of reusable or future-proof components. This is instead of waiting for another electronics manufacturing supply chain relief.