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Supply Chain Issues

If you haven't discussed your requirements for the whole of 2022 with us, then you run the real risk of a Line Stop.

We are working with our clients to ensure smooth supply, but frankly we are having a hard time explaining the real dangers of Line Stops / Long Delays to the supply of all electronic assemblies.

Materials shortages have worsened through the last quarter of 2021 and we expect it will continue to worsen into 2022 and beyond.

Our advice has been and remains to purchase as a minimum all materials now, for 2022 production.

We have been successfully working with some clients to achieve this, with a policy to purchase all materials from suppliers, who currently have stocks on hand, and not rely on quoted lead-times. We have suppliers world-wide, and to date this has been possible.

At the moment any stock on-hand should be seen not as a liability, but as an appreciating asset!

The situation is worsening

In general we are finding that some critical parts are becoming increasingly un-available.

In the near future you may be forced into considering second-hand refurbished parts.

As a minimum, the longer you leave discussions the more expensive parts will be.

Engineering design changes, even to existing designs, may also become a reality if critical parts aren't sourced.

However, you can still put your business in a position to succeed by planning accordingly.

Back Story

We have had discussions with a number of the major chip manufacturers, at a high level. They all report they are not keeping up with demand, and this situation isn't improving, and they have no idea when lead times will reduce. Most say no improvements until late 2023 at the earliest. 40 weeks plus lead-time is now not uncommon for a manufacturer to quote.

So far this year we have found that any lead-times quoted by manufacturers & franchised distributors alike are not to be believed, and are in general always pushed out further.

Another issue is short shipment of expected quantities.

In recent times, It has become necessary to purchase from both world-wide distributors and

from brokerage suppliers at inflated costs as stocks dwindle and the cost for materials increases.

Demand for electronic components is very high at the moment for all the obvious reasons including the Global Economic Recovery post Covid etc.

However what isn't as transparent is the strain on the electronic component supply chain caused by :-

Companies purchasing components well in advance ( This should be you ! )

One of the world's main 3 Silicon chip plants was shut down due to a Fire.

Water restrictions in Taiwan.

Oxygen Shortages (Oxygen is used in some electronic component manufacturing)

Engineering design changes, even to existing designs, may also become a reality if critical parts aren't sourced.

Power shortage & blackouts in China.

Port closures & back logs throughout the world.

Lack of Shipping capacity.

Manufacturers are rationalizing part variants and obsoleting more parts.

In addition to the ongoing issues, we will also soon see the impact of Christmas and Chinese New Year which will add even more strain on the component and electronics manufacturing industry.

I hope you have found this a useful insight, and once again we would implore you to act immediately.

If you need any further assistance please contact one of our team.

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