Component distribution by design

Distribution can play a bigger role in ensuring component supply, says Christos Papakyriacou

Papakyriacou: Distributors can work with components vendors to combat shortages

Economic uncertainty has caused global component shortages. The biggest challenge facing distributors of electronic components are the extended lead times that declining sales over the past two years have caused.

A number of component manufacturers appear unwilling to make the leap of faith required to increase capacity, and the whole supply chain is suffering. As a result, OEMs have had to revisit their schedules and some have delayed product launches.

The decrease in demand that occurs during a recession is cyclical and manufacturers are often unprepared for the sudden growth in demand when the economy starts to improve.

As we start to see an increase in new business opportunities, a number of organisations are experiencing difficulty getting the components they need.

Even if the lead manufacturer is willing to commit to the substantial investment, it is often beyond their control if one of their suppliers is unable to deliver.

An example of this is when semiconductor shipments fell well below forecast levels in April, which could have an effect on the industry, especially on the promising smart meter market.

Distributors must use their design expertise and product knowledge to help OEMs stay on schedule. Distributors may be brought in at the beginning of the design process and be aware of proposed launch dates. They may speak with various suppliers well in advance to ensure that the required components are in stock and to the timeframes required by the manufacturer.

A design-based approach means that distributors can deliver finished products as well as specific add-ons for existing offerings.

One positive side effect of the global shortages is an increased level of responsibility throughout the market, with organisations performing better due diligence in their forecasting and planning.

There is now more long-term forecasting, with orders anywhere from four to 12 months ahead of schedule. This will benefit the whole industry.

Christos Papakyriacou is managing director at Alpha Micro Components