Globally the electronic components market has been affected by the economic factors influencing manufacturing capacity. As a result, there is inconsistency in terms of the lead times of components, with some requiring reasonable / typical lead times and others being more affected by supply and demand issues, therefore extending lead times to more than 20 weeks and even longer in some cases.
The latter scenario is becoming more likely as suppliers have reached a stage where ‘allocation’ may become necessary for certain parts. This means that what is available is shared across customers, with the unfortunate consequence that no complete customer requirements may be fulfilled at a particular time, but all are provided with a portion of their requirement. Arrow Altech makes every effort to accurately forecast on their customers behalf to ensure supply, but this is not always successful.
The allocation is partially determined by what we can predict in terms of demand. This means that those customers with well forecasted and consistent business will be prioritised in terms of allocation; and ad hoc business, or clients with a sudden increase in demand, or inconsistent historical volumes will have less success in obtaining stock.
These cycle times are not permanent, but they do occur from time to time.
AAD endeavours to always be an enabling force in the supply chain, facilitating the flow between component manufacturer and manufacturing customer. From this vantage point, here are five tips that make for good habits in general, and mitigate the risk of long lead times:
- Maintain a good relationship with your distributor
- Invest in relatively accurate forecasting
- Invest in buffer stock (this can be done by the customer or in agreement with a distributor)
- Place orders timeously, particularly for new products, or when there are significant changes in volume
- Work with your distributor to ensure you have alternate parts approved where possible
For more information, please contact:
+27 (0) 83 449 0291