Your scarcity is someone else’s excess

0

Reading time ( words)

The problem
Excess inventory is a pervasive problem in the Electronic Manufacturing Services (EMS) industry and is compounded by the complexity and volatility of the modern supply chain. Considered an unavoidable cost of doing business, the cost of unchecked inventory has taken its toll on manufacturers without tight controls in place to keep their businesses safe. Excess inventory is not only costly for the manufacturers themselves, but also for their end customers. Reluctantly, manufacturers are sometimes forced to eat that cost to avoid disrupting relationships with their customers and in hopes of making up for losses in next year’s customer orders.

The other end of the inventory position is also a serious problem. While excess inventory can tie up much-needed capital, a lack of needed inventory can prevent an EMS company from shipping assemblies to customers. In fact, the absence of a single part can have a significant impact on the amount of capital tied up in partial kits waiting to be delivered to the production floor or in incomplete work orders. The adage “The most expensive part on the BOM is the part you don’t have” became popular during the 2018 MLCC shortage and continued to ring true during the latest round of chain constraints. ‘supply.

Supply chains and markets experience normal fluctuations, so this type of oversupply and shortage situation is not necessarily unique. But the impact on OEMs and EMS companies appears to be far more extreme than the normal ebb and flow of a market. Indeed, even when the market as a whole is sufficiently supplied, the right components are not in the right places at the right time.

Continue reading this article in the November 2022 issue of SMT007 Charger.

To share


Suggested Articles

04/20/2022 | Zac Elliott, Siemens Digital Industries Software

Let’s face it, in the past, electronics manufacturing was not a big business for North America. The majority of electronics products are assembled in Asia, where supply chains and operating costs provide many economic advantages. In North America, the electronics manufacturing industry has generally focused on low-volume, high-cost devices, while higher-volume products are manufactured elsewhere. However, the COVID pandemic and various legislations in the United States are changing the game, making manufacturing electronics in North America a more attractive option. How can factories in North America compete for the same kind of manufacturing traditionally done in lower cost regions?

03/18/2022 | I-Connect007 Editorial Team

No doubt you will understand Foad Ghalili when he expresses his concerns about the rising input costs of doing business, from getting the right components to delivery times and price increases. But what’s unique about the president of Epoch International is how his company has leveraged its operations in the United States and China to make the most of the other thing that’s on everyone’s mind: the labor shortage. If you’re not already implementing his ideas, you’ll come away from this interview with some surefire advice.

02/09/2022 | Nolan Johnson, I-Connect007

Supply chain, distribution and price inflation are in the headlines these days. To better understand how EMS companies are reacting or could react to pricing pressure from input costs, we asked both EMS industry company representatives and EMS equipment manufacturers to comment on how the industry can respond to current pressures. Editor Nolan Johnson spoke with several EMS executives about various ways to deal with rising costs.

Share.

Comments are closed.