2020 and 2021 were years like no other. First, the global shutdown flipped the supply chain world on its head, exposing inefficiencies with lasting repercussions. Businesses were left with billions of dollars in unsold goods, causing inventory-to-sales ratios to surge for a short time before businesses liquidated these inventories. Then, as the economy recovered, businesses struggled to bring inventories back to pre-pandemic levels, causing inventory-to-sales ratios to fall.
Now, fast forward to 2022, and the supply chain industry is facing a looming recession. Just over the past three years, it has been clear that economic impacts are critical demand drivers and can quickly put a strain on efficient electronic component supply chains.
What can the electronic component supply chain industry expect during a recession? With a recession looming, product, supply, demand, and inventory levels are all at risk of being affected, causing a product influx in electronic parts and ultimately falling prices.
It is no shock that a fall in aggregate demand and lower economic growth puts downward pressure on electronic component inventory. As a manufacturer, this can lead to less profit and ultimately signal a lack of product demand. With a recession taking shape, suppliers and manufacturers can expect oversupply and change in market pricing of electronic components, a higher probability of counterfeit parts due to lack of traceability, manufacturing sites being brought back to the United States, a change in raw materials for the manufacturing of parts, and more.
Futureproofing your supply chain
With all of the supply and demand changes, managing an oversupply of electronic components can be challenging. What will happen to the supply chain when the US starts pulling out of foreign countries? Are precautions taken to ensure your supplier & manufacturer relationships are strong and there is little disruption in the electronic component supply due to oversupply? Will manufacturers have to revalue their inventory? Will it be valuable?
These are all great questions with actionable, logical answers. During supply shortages, manufacturers must supplement product shortcomings and plug the holes in their supply chain.
Join our CTO, Ken Bradley, to learn how you navigate the end of electronic component shortages and continue to build a resilient supply chain.
The webinar will explain:
- How predictive analytics can identify risks/cost savings
- How to minimize supplier cash problems and impact
- How to address internal and external factors
- … and more
The companies that will have lasting success in any economic environment aren’t doing what their predecessor did ten years ago. Instead, they are evolving, consulting data, and taking steps towards building a resilient supply chain by enabling the next generation of technological improvements.
Register for our webinar to build your organization’s resilient electronic component supply chain.