As Q4 ends and 2023 begins, many in Supply Chain Management look for signs of improvement.
In 2022, procurement specialists and supply chain managers suffered from devastating financial losses due to continued component shortages and logistical delays. As Q4 draws to a close, many wonder if these supply chain management challenges will persist into 2023.
Mectronic, one of the leading online distributors of parts and components, understands the integral role supply chain management plays in successful project management. Our thumb never strays from the pulse of acquisitions, and we are happy to report the supply chain issues of the last two years look to give way to some reprieve in 2023. As the new year brings procurement practices back to some sense of “normal,” look for these key trends to drive supply chain success in 2023.
New Supply Chain Management Strategies: Elastic Logistics
Lean processes promote profitability. However, the supply chain difficulties of the last two years forced many companies to re-evaluate their logistics and sourcing processes. While lean sourcing minimizes the expense of overstock, many businesses experienced costly production delays as key components ran out.
Elastic Logistics is an approach that offers companies greater flexibility to respond when markets fluctuate. This approach shifts from a just-in-time mindset towards a just-in-case approach when managing inventory of critical supplies and components.
Leveraging artificial intelligence and other blockchain technologies, Elastic Logistics allows companies to adjust supply chains to minimize disruptions. These technologies offer greater flexibility across variables, such as shipping schedules and routes. They also enable companies to maintain operational stability with more visibility end-to-end.
Growing Reliance on E-Commerce for Semiconductors and other Electronics Components
Supply chain struggles within the electronics sector inspired a new degree of creativity and acceptance in the face of critical component shortages. The disruptions and part shortages of the last two years offered e-commerce distributors opportunities to demonstrate value.
Current chip shortages provide evidence of growing reliance on e-commerce distributors. More businesses are re-evaluating their traditional sourcing practices, recognizing the benefits of procurement via e-commerce.
E-commerce distributors offered more inventory on hand through the last 18 months of the growing chip shortage. These distributors also provided critical data points to improve compliance and sourcing practices. OEMs, for example, appreciate the depth of inventory available through e-commerce platforms. They benefit from features like BOM searches that automatically fill a bill of materials. Layers of compliance information incorporated into the process improve supply chain visibility and reduce risk.
Increased Interest in Vendor Transparency and Supply Chain Multi-Sourcing
2022 supply chain challenges encouraged many companies to re-evaluate their approved vendor list or preferred vendor list. Manufacturers needing critical components recognized the importance of developing vendor lists stacked with multiple sources for critical components.
The re-evaluation of vendor lists emphasized two key characteristics:
- The number of vendors on an approved or preferred list.
- The importance of franchised supplier visibility behind each vendor.
Relationships remain important to supply chain and sourcing success. An established history with component vendors or distributors can result in forward-thinking procurement and warehousing strategies. Established history allows vendors to better predict needs and offers insurance against component shortages.
Single-vendor reliance introduces risk into supply chain management. Many companies are transitioning from single-vendor sourcing practices towards multi-sourcing. Multi-sourcing offers the opportunity to develop a short list of distributors capable of delivering essential components. Establishing relationships with multiple vendors in advance mitigates risk as companies develop strategies for sourcing difficult-to-find parts and components. Optimizing a multi-source model creates the opportunity to estimate pricing, develop alternative shipping plans, as well as evaluate potential replacement parts when critical components cannot be found.
Re-evaluating an electronics preferred vendor list offers another opportunity to improve procurement practices. Transparency remains a critical factor influencing vendor selection in 2023. Informed by recent supply chain challenges, companies are looking for greater visibility from vendors. While ample supply might previously have influenced vendor selection, companies now seek to understand the franchises and suppliers behind a vendor. Data points such as lifecycle status, lead times, and inventory history provide a more comprehensive picture of vendor stability and capability.
High Demand for Electronic Components Persisting into 2023
Demand for electronic components remains high across all verticals. While some of this increased demand stems from post-Covid recovery, the rapid increase of digitization and automation across every industry suggests this trend will continue well into 2023.
Mark Burr-Lonnon, Senior Vice President of Global Service and EMEA at Mouser Electronics, suggests the essential technologies driving increased demand for semiconductors also drive higher demand across the electronic component industry.
Burr-Lonnon recognizes supply chain instability and inflation remain critical issues for 2023. He points to shrinking product lead times as indicators of improving supply chain management. Burr-Lonnon further suggests that price growth and profit margins will likely stabilize, especially as supply chains return to normal.
Mectronic Is Your Trusted Source For Components
Mectronic continues to connect buyers with products, leveraging the latest technologies and trends to simplify supply chain management and component procurement. With a catalog of more than 333,000,000 parts from all major component distributors as well as from independent distributors, myMectronic remains the most comprehensive tool for product discovery in the world.
Whether you are sourcing components or have inventory to sell, visit myMectronic today to learn how we partner to improve procurement.
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