3 Non-Covid Reasons For Shortages (And 2 Things You Can Do Now)

 

It’s a new year with the same problems for the global electronics supply chain, according to a new report from JABIL. We’ve covered the pandemic related shortages at length and Omicron is at the moment causing an entirely new round of havoc at factories across the globe.

But it’s not all COVID-19’s fault, at least that is one of the key takeaways from this post by Graham Scott, VP of Global Procurement for multinational manufacturing and supply chain giant JABIL. And while this isn’t exactly great news, it does mean that if some supply chain hurdles aren’t a result of COVID-19, they can be solved independently of the pandemic. So, this cloud most certainly has a silver (or in this case tungsten?) lining.

So what else is causing the wait? Here are three non-pandemic reasons the supply chain is in disarray globally and two things you can do about it today.

Three Reasons For Component Shortages

Reason #1: The Ever Evolving Automobile

If you listen very closely you can hear the swansong playing for internal combustion engines. Between increasing consumer demand and government incentives, it’s estimated that electric vehicles will account for  ⅔ of global car sales by 2040. Here’s the catch: It takes between 2,000 to 3,000 capacitors to run a gasoline-powered car. An EV needs 22,000 with that number expected to climb significantly as more vehicles add self-driving and other next generation features. Demand for vehicles is strong despite (or perhaps because of) pandemic-related shortages which are going to be with us for a while

Reason #2: Smarter Smartphones

1.5 billion smartphones roll off assembly lines annually, each one with approximately 1000 capacitors inside. That’s roughly 3 trillion capacitors, or about half of the multi-layer ceramic capacitor market every year.

Early COVID factory closures in Asia hit the smartphone market hard–but they’ve rebounded and sales are up more than 10% despite shortages and economic disruption. 5G devices are driving the boost in sales, although manufacturers notified the FCC that continuing shortages will undoubtedly slow deployment of those next generation networks.

Reason #3: A Cacophony of Connectivity

IoT and connected devices will continue to place their own unique pressures on the global chip supply. Research by Ericsson predicts we’ll have 26 billion connected devices in use by 2026. Contactless payment and high-speed WFH connectivity are driving that boom, with COVID-19 continued impact seen in the heavy growth of remote patient monitoring and healthcare related IoT devices.

Two Bold Moves For Today

And now for that tungsten lining…each of these three issues can be partially alleviated by one of two things.

Bold Move #1: Reach Out + Call Someone

Communication and collaboration with suppliers and customers is more important than ever. That means a phone call instead of an email and meeting in person if it’s safe. Ultimately, you want to find an honest win-win situation for the both of you, and nothing will help that better than building a relationship built on trust and communication.

Bold Move #2: Upgrade Your Intelligence

One thing all three of the above reasons for shortages pointed at is a marked increase in the number of components necessary to make the world go ‘round. Sourcing them and getting visibility into availability and lead times will grow more complex. The only solution is upgraded market intelligence with something like our CIQ solution. It’s designed for unprecedented visibility in commodity management and procurement strategies. It could also save you millions.

For more information on the shortages, and what you can do to position your business to thrive rather than survive in today’s difficult market, be sure to visit our resources page.

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Paul McNamara
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