How to overcome the challenges of the electronics supply chain


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Supply chain bottlenecks are not a new concern for the electronics industry, but many experts warn that they are getting worse. Here are some actionable strategies you can use to reduce and avoid supply chain challenges. Working with a larger group of suppliers The COVID-19 pandemic has highlighted the downsides of focusing all or most suppliers in one area. Even outside of geography, difficulties arise for the electronics supply chain if a single entity has unexpected problems in supplying raw materials. Developing a multi-sourced strategy is a solution that is increasingly popular among supply chain executives. The goal is to select acceptable suppliers who are willing to provide backup materials when your primary suppliers encounter shortages. This option works especially well if you have one or a few suppliers who regularly encounter these issues. It can also be less expensive because you only contact secondary suppliers when disruptions occur. However, there are some downsides. For example, it becomes more difficult to manage relationships with many suppliers rather than one. Additionally, placing large orders with one supplier rather than with many suppliers often makes customers eligible for volume-based discounts. Moving production to less affected areas If you work for an electronics manufacturer with a presence in multiple locations around the world, shifting operations temporarily to a country less prone to supply chain disruptions may be a proactive way to mitigate difficulties. Samsung’s decision-makers made that choice during the COVID-19 crisis when they temporarily moved some production to Vietnam from South Korea. This happened when a worker at a South Korean factory tested positive for the virus, necessitating a temporary shutdown. This event happened after several previous cases where other employees had fallen ill. The impact of the transition on some of the high-end smartphones from Samsung, such as the Galaxy S20 and Z Flip, which are foldable models. Representatives said they would return production to the affected plant in South Korea once the COVID-19 situation becomes more stable. This option is not available for all companies. However, leaders must think quickly and weigh all the potential pros and cons of any temporary move when it is likely. For example, how could additional production requirements negatively affect the replacement plant? Implementing strict inspection protocols Supply chain challenges can also arise due to deficiencies in quality control. However, improved visibility makes it easier to confirm if and how much this is a problem. Maintaining high quality standards is an effective way to reduce costs. Staying on top of issues can also help boost a company’s reputation. Consider a component such as the printed circuit board (PCB). It is often part of equipment or biomedical products used to protect national security. People use different methods to evaluate the PCBs. X-ray scans work well for densely populated panels because they do not present any shadows. Instead, an automatic laser tester measurement assists in checking the reflectivity of various components or verifying the dimensions of the weld joint. Regardless of the parts involved, create an extensive process to ensure it meets quality standards. Most manufacturers also hold suppliers accountable for relevant metrics. This could include the defect rate or the number of chargebacks. This represents money that is collected from suppliers after the shipment has arrived because the items do not meet expectations. Engage in comprehensive forecasting You cannot predict the future with certainty, but in-depth forecasting enables you to better prepare for whatever is on the horizon. For example, people who rely on electronics components can start with modeling their existing supply chain structure and production capacity. From there, they can branch out by computing what-if scenarios that can cause challenges in the supply chain. Which of them is likely to happen? Have you ever had a company with them? If so, how did the strategies used work? It is also wise to consider scenarios that could have multiple ramifications. The winter storms that hit Texas in early 2021 are excellent examples. Authorities in Austin have asked several semiconductor manufacturers to temporarily scale back their operations to reduce weather-related stress on the electrical grid. One of the companies affected was Dutch chip company NXP Semiconductors NV, which owns roughly 30% of its total plant area in Austin. Besides planning for the most probable scenarios through forecasting, another way is to look at more expensive situations if the company is not prepared for them. Having the demonstrated financial ramifications for executives can make them more motivated to act and allocate more resources to solve current supply chain risks and reduce future problems. Prioritizing robust cybersecurity The electronic supply chain can become a target for cybercriminals who want to cause widespread chaos. This is not a far fetched possibility. Foxconn, the world’s largest electronics maker, responded when cybercriminals struck the company with a ransom attack in late November 2020. The event affected a Mexican facility where workers assemble electronics components and ship them across North and South America. Sources say that the hackers first stole the data from the company, then encrypted the organisation’s devices. The criminals demanded a ransom estimated at about $ 34 million, and demanded the amount in cryptocurrency. Foxconn representatives confirmed the attack and said the company was working to restore service. However, even in the best case scenario, this could take weeks. It’s easy to imagine how the cyber attack had repercussions on Foxconn customers across the region. Cybersecurity isn’t always a concern, as company leaders work to strengthen the electronic supply chain. However, that must change, especially as attacks become more common and severe. Ensuring that all connected systems are properly secured – especially when companies invest in new machines or software – is an excellent start. However, employee education is another key component, since the risks can arise from an email attachment full of viruses or a phishing email. Targeted action boundaries Supply chain challenges All electronics companies face supply chain hurdles. Even if things go well for the organization now, this may not be the case for long – especially if the organization has various risks that have not been addressed. Identifying supply chain threats and creating an actionable plan to mitigate them can help companies stay competitive and keep their customers satisfied. The steps here are not an exhaustive list of tips. However, they will get you off to a good start as you explore the most appropriate ways to make your electronics supply chain more flexible. Written by Emily Newton, industry journalist and editor in chief of Revolutionized.


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