New-Tech Europe | Aug 2019 | Digital Edition

we can expect to see ongoing supply issues in legacy and mature products. OEMs that don't transition to modern components further up the technology curve must be prepared to battle for components every single day. The current conditions amplify the need to have supply chain involvement in all areas of your business, from design to pre-production all the way to end-of-life management and product delivery. If you miss out working on any of these areas, you run the risk of having a disrupted product. In a Component Supply Shortage, Relationships are Key In an effort to keep the market somewhat balanced, suppliers are turning to allocation methods. When supply is short of meeting demand, suppliers allocate a percentage of their output to each customer. This means that each customer may get a percentage of the demand they have for a specific product. The allocation process is tough on all buyers of components and requires constant contact with the suppliers to ensure receipt of components for the product they need versus the product the supplier wants to support. Dur i ng sho r t ages , supp l i e r s determine who to support. We can't emphasize the importance of supplier relationships enough. Whether you are doing the work yourself or outsourcing to a manufacturing solutions provider like Jabil, strong supplier relationships are essential to surviving component shortages. But let me clarify. These "strong" relationships don't begin during

supply shortages; they must be established during a buyer's market.

paper dispensing products and more. This explosion of growth unlocks new business opportunities and models for OEMs worldwide, but it creates additional demand on an already constrained market. Where are Component Supply Shortages Headed? These moves have created a high- risk environment for mature, less- profitable product families. Suppliers that continue to manufacture components for legacy products will only produce parts at profitable levels, leading to price increases for the wider customer base. The market is softer due to macroeconomic events and global uncertainties. This, in turn, has led suppliers to soften their position with regards to the rapid technology transition many spoke of. Although suppliers still have the strategic outlook to move to newer products due to factory utilization, we’re seeing some additional short-term support for legacy products. Jabil's procurement intelligence team is forecasting that the current supply/ demand cycle for automotive-grade and legacy ceramic capacitors could be as long as four years. As we look toward the next five years, you can expect a supply recovery on products that are attractive investments to suppliers—the latest and greatest technologies. Jabil's procurement intelligence team is forecasting that the current supply/ demand cycle for automotive-grade and legacy ceramic capacitors could be as long as four years. Meanwhile,

Surviving a Component Supply Shortage as an OEM The decisions you make right now will affect your longevity. These types of supply shortages separate the good from the bad and there are companies that will struggle to meet their production goals if they are not taking today's market seriously and responding to the component/ technology evolution. Although there are no silver bullets to success, there are several steps companies can take to stay ahead of the market: Continually evolve product design to align with supplier's technology and production roadmaps Add new alternative suppliers Move away from single-sourced parts Increase collaboration and visibility between product design, procurement and supply chain organizations As basic as it sounds, having multiple sources per part is no longer just a nice-to-have – it is a requirement. In today’s market, with options becoming limited, having the ability to rapidly select alternative qualified suppliers and keeping your products on schedule is even more critical.

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