A resilient electronic component supply chain can endure, if not avoid, disruption and setbacks. As a result, companies worldwide are looking to invest in supply chain technologies to achieve more operational performance, increased productivity, flexibility, and risk reduction.
Shortages and inflation have resulted from heightened demand, trade restrictions, factory closures, and rising freight costs. In addition, national lockdowns are still present, resulting in shipping delays and disrupted manufacturing. As a recession looms, prices will fall. As a result, supply chain shortages will be sporadic. Nevertheless, disruptions will still affect components and raw materials. How will you adapt?
Here are the seven steps to make electronic supply chains more resilient in an unstable environment:
1. Risk Management
The ability of a company to be successful during the unforeseen, like the Covid-19 pandemic, is a core element of success. Supply chain resilience no longer means the ability to manage risk. Today, considering risk and bouncing back means better positioning your company versus your competitors. A company needs to be innovative and not rely on old practices.
2. Bigger is Not Always Better
Just because a company is big does not mean it is secure. The average life of a company is getting shorter. A large company does not indicate that it has more supplies, even though it might be cheaper. The goal of supply chain resiliency is not necessarily about minimizing costs, which, in theory, many think a larger company can offer. Instead, resiliency will happen by selecting suppliers and geographies that can best ensure supply.
3. Diversity and flexibility
Single-sourced suppliers can be troublesome to a supply chain. Single sourcing can reduce costs and offer an exclusive product, but these suppliers have increased risk. On the other hand, diversity and flexibility can save a company. Diversifying vendors can minimize risk while maximizing reach. Likewise, when a company increases supply chain flexibility, it can withstand disruptions and respond better to demand fluctuations. One way to diversify a supply chain is by spreading it worldwide. That way, there are options if one geographical region deals with a shutdown or natural disaster.
4. Data and Technology
Data and technology are critical factors that lead to solid supply chains. Collecting and using data makes it easier to make informed plans and processes with the availability of technology. The key is to collect and record analytics constantly. A savvy supply chain works hard to streamline software platforms to work together. Once prices decrease, there will be more data than someone can analyze. Digital technologies and supply chain skills will win. Those companies adopting digital technologies and having good supply chain skills will be most successful.
5. Operational Performance
Tracking operation performance can save your supply chain because it is the leading indicator that a company is in trouble. A company at risk will be unable to pay suppliers timely, on-time delivery will falter, and staff will start dwindling. If you notice any of these, you are probably dealing with a company in trouble.
Good relationships count and play a central role in supply chains. A poor connection can have lasting ramifications for suppliers to customers. Conversely, companies with good relationships with suppliers are more successful. Once you create a collaborative partnership, that relationship will remain at the center of supply chain management. In addition, a collaborative relationship can promote innovation, which is crucial for achieving growth and improving resilience.
7. Research, Strategy, and prediction
A healthy supply chain needs research, strategy, and prediction. First, you must make sure your suppliers are strong and diverse. Then, to understand a supplier’s risk level, you should study their operational performance. Finally, delivery time and the quality of products and materials can hold up a supply chain.
A world-class supply chain is attainable. The key is to monitor supply chain risk. Wild fluctuations in the world order and economy are likely to continue. However, successful companies can adapt in these uncertain years.
Lytica™ is the world’s only electronic component spend analysis and risk, intelligence provider. They do this by using actual customer data. The SupplyLens™ Pro Plugin
helps assess risk and normalize price. The plugin has the world’s largest database with actual prices customers paid for electronic component intelligence.
Contact Lytica To see how they can help obtain a resilient electronic component supply chain.