Categories
Supply Chain

The Importance of Quality Control in Electronic Component Sourcing

Electronic components are pivotal in ensuring the performance, safety and reliability of end products. A proactive quality control system and processes in electronic component sourcing play a critical role, guarding against substandard, counterfeit or unreliable components entering the supply chain.

Quality control is particularly important when working with independent electronic component distributors. These suppliers can prove extremely useful when sourcing obsolete, long lead time and shortage electronic parts. Closely investigating their quality processes, paying particular attention to counterfeit mitigation, looking carefully at their accreditations and customer reviews will all prove to be time well spent.

In this article we explore the importance of working with electronic component suppliers that implement the right inspection and testing, adhere to key regulations, and follow a thorough vendor selection process.

The most common quality control issues for electronics

As the quality of electronic components directly influences the performance and reliability of the end products they are integrated into, inferior or counterfeit components can lead to severe consequences – resulting in anything from inconvenience to catastrophe.

Supply quality control minimizes the risk of defective, flawed or inconsistent electronic components. It is the foundation upon which we build trust in technology, one that assures us that our electronic devices will perform as expected and do so reliably over time. This is why Cyclops Electronics has integrated quality control and risk management through all our operational processes, making quality our top priority.

There are a range of common concerns when sourcing electronic parts from an independent supplier. These concerns can be identified and dealt with by the supplier’s quality control system. They generally come under three classifications:

  1. Counterfeit Components: Counterfeit components infiltrating the supply chain are a grave concern. These components mimic authentic ones in appearance but lack the necessary quality and reliability standards.
  2. Remarked Components: Recovered or refurbished parts can be renovated in an effort to restore them to a ‘like-new’ condition. This process usually involves resurfacing and remarking the parts with the object of making them pass as new components.
  3. Substandard Components: Components that may have been stored incorrectly leading to damaged pins, poor visual appearance, ESD or moisture sensitivity issues, oxidisation, and failure to solder correctly.

Donna Sykes, QA Manager at Cyclops Electronics, explained:

“Poor quality components can have a profound ripple effect on an electrical product, from performance issues to safety concerns. Beyond that, it is the reputation of your business that is at stake, as it is not just the components that lose trust, but the entire brand – this is something we are determined to avoid for all concerned.”

The core pillars of quality control

In order to uphold the integrity of the supply chain and ensure the quality of end products, we observe two key pillars of quality control to ensure the quality of your components: component inspection and testing, and on-going supplier assessment.

Supplier assessments involve the systematic and on-going evaluation of suppliers. When we assess a supplier’s ability to consistently meet quality standards, we consider factors like their own quality management systems, accreditations, trade references and ERAI checks for any alerts, issues or disputes. This helps Cyclops Electronics select reputable suppliers, build trust and mitigate any risks associated with substandard or counterfeit components.

Component inspection entails our own in-house evaluations of all incoming electronic components. Our component inspection process, developed over 30 years, includes visual inspections, dimensional checks, and resurfacing, acetone and scrape testing among others. When required, we will submit the components to additional external testing through our third-party accredited test hoses, including advanced technologies like X-ray analysis to uncover hidden defects. Discover more about the quality control processes we undertake at Cyclops.

How supplier assessment affects electronic component quality

It is not just the testing and inspection process that provides quality control adherence, but also the selection and management of vendors in the global supply of electronic components. By diligently evaluating and selecting reputable suppliers, we mitigate supply chain risks, ensure regulatory compliance, and ultimately deliver high-quality electronic products to our customers.

A comprehensive and reliable supplier assessment process is the cornerstone of a successful electronic operation, fostering long-term partnerships and driving overall business growth.

Key aspects of our supplier assessment include:

Supplier Qualification: During the assessment process, various factors are considered to qualify suppliers. These factors may include the supplier’s reputation, financial stability, certifications, quality management systems, and adherence to industry standards.

Quality Control Systems: Assessing a supplier’s quality control systems provides insight into their ability to consistently produce high-quality components. This evaluation may involve examining their processes, testing procedures, inspection methods, and traceability systems to ensure adherence to quality standards.

Past Performance and Track Record: Evaluating a supplier’s past performance is crucial to determine their reliability and consistency. This assessment may involve reviewing their history of delivering defect-free components, responsiveness to quality issues, and their commitment to continuous improvement.

Vendor Grading System: Cyclops’s approved vendor list, consisting of over 2,000 suppliers, is supported by a robust vendor grading system, which is visible to all buyers within the company. Continual monitoring and reviewing of supplier status is conducted by our purchasing teams using documented criteria and gradings amended accordingly. An annual supplier review is also conducted, and where necessary, results fed back to key suppliers.

Important electronic industry standards to adhere to

Compliance with industry-specific quality standards and regulations is more than a checklist requirement; it is an investment in reliability, safety and ethical responsibility. These standards are gatekeepers that guarantee the quality and integrity of electronic components supplier, contributing to the overall success and reputation of businesses like ours.

At Cyclops, we focus on the following key standards integral to electronic component supply:

ISO 9001: ISO 9001 is one of the most recognized quality management standards globally. It outlines requirements for quality management systems, emphasizing process control, customer satisfaction and continuous improvement. Cyclops Electronics has held ISO 9001 accreditation since 1996, successfully transitioning to the latest standard, ISO9001:2015 in March 2018.

RoHS, REACH, and WEEE: Environmental stewardship is critical in electronic component sourcing. The RoHS directive, REACH regulation, and WEEE (Waste Electrical and Electronic Equipment) Directive are key legislative frameworks that guide the industry. RoHS and REACH limit the use of certain hazardous substances, while WEEE focuses on the responsible disposal and recycling of electronics. Compliance ensures that electronic components are not only safe and sustainable but also that end-of-life electronics are managed in an environmentally sound manner. This approach minimizes the ecological footprint of electronic components and promotes the health and safety of both the planet and its inhabitants. Cyclops Electronics’ adherence to these standards demonstrates our dedication to environmental responsibility and ethical business practices.

Conflict Minerals: In the realm of electronic component sourcing, the issue of conflict minerals — typically tin, tantalum, tungsten, and gold (3TG) sourced from regions embroiled in armed conflict — is of paramount concern. Cyclops Electronics is committed to ethical sourcing practices and adheres to regulations that discourage the use of conflict minerals. We ensure our supply chain is transparent and free from materials that could finance armed groups, aligning with initiatives like the Dodd-Frank Act. Our stance on conflict minerals reinforces the integrity of our products and the value we place on human rights and corporate responsibility.

JOSCAR (Joint Supply Chain Accreditation Register): This register is essential in aerospace, defence and security sectors. It is a standardized supplier accreditation system that ensures the highest level of quality, reliability, and compliance with industry standards. Cyclops has been JOSCAR registered since 2016, which demonstrates our commitment to stringent quality control and ethical sourcing practices.

ERAI Membership: Cyclops Electronics takes pride in being a member of ERAI (Electronic Resellers Association International), a respected global information services organization that plays a vital role in the electronics supply chain. As a member, we gain access to crucial information that helps us mitigate the risks of counterfeit and substandard electronic components. Leveraging ERAI’s resources, we ensure that our practices are aligned with the best in the industry, sourcing electronic components with precision and ethical consideration.

Final takeaway

As we navigate this ever-changing technological landscape, the message is clear: quality control is not just an option, it is an imperative. It is an investment from us to the long-term success of your business, the safety of your customers, and the reputation of your brand.

That is why we prioritise our Quality Management Systems and make a promise to our stakeholders to ensure that every component we source contributes to a brighter, safer future.

Through a multifaceted approach, including component inspection, testing, supplier assessment and adherence to industry-specific quality standards, we safeguard our sourcing and our customers’ supply chain and brand reputation.

Additional Reading

If you have a particular interest in investigating the regulations or latest updates behind quality control technologies in the electronics industry, you might find some of the following organisations useful in this regard:

IPC – the association connecting the electronics industry that provide access to training and resources.

Quality Magazine – publishes articles and resources related to quality control, including electronic component testing.

Electronic Design – offers articles and insights on quality and reliability in the electronics industry.

EDN Network – provides articles and insights on quality and reliability in electronic component sourcing and manufacturing.

 

Of course, you can always find further reading on Cyclops Electronics’ own blog, or contact us to ask a specific question about our methods and practices regarding quality control.

Categories
Supply Chain

The importance of choosing the right independent electronic component supplier

How independent electronic suppliers operate?

Independent electronic component suppliers occupy a particularly useful area of the market because they are generally free of any ties to a particular manufacturer or brand. This offers impartiality and flexibility of approach in finding the right parts for you. 

If you are seeking a part that is obsolete, is subject to long lead times or is in particularly short supply, it will be an independent supplier with the answer to those problems.

Electronic Components

Before embarking on a new supplier relationship, it is important to do the research first. Closely investigating quality processes, paying particular attention to counterfeit mitigation, looking carefully at the awarded accreditations and customer reviews will all prove to be time well spent.

With a few, well selected independent suppliers in your back pocket, you will be well placed to weather any market conditions.

Benefits of working with an independent supplier

Broad component availability

To maximise your chances of finding stock, you need to find a supplier with wide reach and ideally with stockholding too.

A good supplier will have their own global network of tried and tested suppliers and brokers each with their own stocklists to tap into. This gateway to vast supply networks will exponentially widen your search to yield the strongest possible results. When combined with your supplier’s own stock, it is a recipe for success.

Try to be open minded, there is plenty of new and original stock sitting all over the world ready to be put to use. Manufacturers often sell off their excess stock and this stock can have full traceability, be in its original packaging and prove extremely useful during periods of scarcity.

Competitive pricing and flexibility

When exploring the possibility of using an independent supplier, it is worth looking at their services. A supplier offering any kind of scheduled ordering service will allow you to be organised in your forward planning as well as locking in prices. 

 

For example, when you use Cyclops Electronics scheduled ordering services, you are able to plan your orders up to 1-year in advance as well as using fixed prices. This can be extremely useful to avoid any potential shortages that may occur in the future, as well as any unexpected price rises. Using this service also means that you are able to free up more warehouse space without having to purchase a full years order in bulk at once, giving you that added flexibility with orders.

Personalised customer support

One of the major positives of dealing with an independent supplier is the personal touch, in the sense that your supplier will get to understand your purchasing portfolio. This enables your Account Manager to be an extra set of eyes and ears. Offering up news, insight and updates can be a huge benefit which in turn allows you to put this market insight to full use and make informed judgements. The time savings achieved by outsourcing these activities can be significant.

Supply chain rigours

Supply chain strength, breadth and rigour is not something to be short cut nor can it be bought or manufactured. There is no replacement for years of organic supply chain intelligence. Does your supplier grade all of its suppliers and act accordingly with regards to testing and inspections?

As one of the largest independent stocking distributors of electronic components and over 30 years of market experience, chances are that you won’t need to look further than Cyclops Electronics to find the components you need. Specialising in hard to find and obsolete components, you can even use our scheduled ordering service to secure large amount of stock in advance at the best price and have it delivered throughout the year – saving you both money and warehouse space.

Contact us today for more information on any of the services we provide. Alternatively, you can enter the part number you are looking for into the box below to search directly.

Categories
Component Shortage

How are semiconductor companies dealing with current industry challenges

There are many challenges facing the chip industry, despite
the semiconductor supply chain no longer being in crisis.

Semiconductor industry challenges

Focusing on high-demand products

The semiconductor shortages are much more under control than they were between 2020 and 2022, but the effects can still be felt. There are various components that are in more demand, like surface mount devices (SMDs), multilayer ceramic capacitors (MLCCs) and SMD resistors. There are also whole industries taking a big hit, like the automotive
industry
and consumer market.

Many companies have switched to manufacturing these higher-demand products to optimise production and profit during these shortages.

Capacity expansion

Some fabs are still dealing with manufacturing delays due
to closures and lockdowns. Although most of these facilities have reopened this year, but since lockdowns began several manufacturers have expanded their operations
in other countries.

There have also been several new initiatives to increase
domestic production and reshoring introduced recently. These include the US CHIPS Act, and the European
Chips Act
, both of which aim to bolster their countries’ places in the global semiconductor market. With these expansion plans manufacturers’ capacity and ability to cater for customers has also increased.

New technologies and Industry 4.0

Advancements in robotics, AI, and digitalisation have greatly
improved the efficiency of the industry. As semiconductors and microchips have gotten more powerful but smaller, it has given rise to a new generation of technology. This, if implemented in a fab setting, can increase output and
improve speed without the need for more facility space.

Optimisation of current facilities might be expensive, but will benefit companies with a more immediate effect than building new fabs, which would take years.

There are many other initiatives that companies that can adopt to optimise in the wake of the supply chain chaos, including expanding their customer base and collaboration with other companies.

We’ve got you covered

Throughout the semiconductor shortages Cyclops has been
ensuring that its customers get the electronic components they need with the shortest lead times possible. 

No matter what the circumstances, our impeccable customer support will never change. To see our expertise first-hand, contact us at sales@cyclops-electronics.com or call us today on +44 (0) 1904 415 415. 

Categories
Supply Chain

Korea Japan trade relations

Chipmaker material suppliers in Korea have been earning
more from domestic semiconductor companies who have been looking for local suppliers.

Domestic supply

Since export restrictions were put in place by their
neighbours, Korean chipmakers like Samsung Electronics have been using local suppliers. This has led to suppliers in Korea more than doubling their earnings in the last four years.

Japan’s restrictions affected areas including photoresist
chemicals and hydrogen fluoride used in chip manufacture. Fluorinated polyamide for organic light-emitting displays was also affected.

The restrictions were first changed back in mid-2019, and
since then 16 Korean materials companies saw combined sales grow by approximately $15 billion between 2018 and 2022.

The affect

Korea Semiconductor Industry Association VP and COO, Ahn Ki-hyun, said Korean companies weren’t damaged by the restrictions. He said, however, the restrictions may have impacted Japanese companies attempting to export to South Korea.

One of the toughest materials to re-source was hydrogen
fluoride gas, used for etching in display production. Much of this has been replaced since 2018 to lower-purity gas produced in Korea.

Despite some of the restrictions now being lifted, the
domestic suppliers that have been adopted may stay for good.

Recent relations

Just last month the two countries came together and agreed
to lift many of the restrictions. Korea has continued to promote using domestic suppliers even if restrictions are eased.

In general the chip industry has not changed much, other
supplies and exports between the countries have stayed the same. In light of the changes it will be interesting to see how the Asian chip market now develops.

The US Chips Act will also affect these new business
relationships. Market shares might change, and only time will tell how the industry will shift as a whole.

Global presence

 

Cyclops Electronics supplies to countries and partners all
over the world. We pride ourselves on our accessibility and level of customer service. If you’re struggling to find electronic components or reliable distributors, contact Cyclops today and see first-hand how a good business
partnership can benefit you. Email us at sales@cyclops-electronics.com, or call us on +44 (0) 1904 415 415. 

Categories
Supply Chain

What is computational lithography?

Computational lithography is a process that could speed up the chip design time.

There are many things that need to be considered when designing or manufacturing a semiconductor. In the early stages the chip’s design will have to be developed – a process that could take considerable time.

As chips get smaller and more powerful, the complexity increases. This means more advanced manufacturing methods have to be considered, sooner rather than later.

Photo lithography

The photo lithography process is when the semiconductor design is etched onto the wafer. It uses a series of light and radiation exposures to etch the semiconductor design onto the substrate wafer. During this process the wafer can be deformed because of the physical and chemical effects.

There’s more and more need for high accuracy in the etching process. There also ideally should be a way to predict or negate any errors caused in the etching. The errors can come from diffraction, the resist used, and a number of other things.

Computational lithography

Computational lithography is a method of simulating chip lithography. It uses algorithms representing the manufacturing process, gathered from test wafers and machines. By running chip designs through a computer the resolution of the pattern can be increased.

This is becoming more essential as chip designs become smaller and higher resolution designs are needed.

The models used in in the simulations plan ahead for the potential physical and chemical effects of the photolithography, deforming them purposely to demonstrate the final effect.

Further developments

A big name in the industry has recently released a software library which will further speed up the design process. This could apparently enable the creation of new lithography solutions and faster turnaround times.

Computational lithography has only been around since the mid-2000s. Following the term’s first use it quickly got adopted industry wide.

A clear picture

 

Cyclops stock a range of different components with a variety of node sizes. Whatever electronic component you’re looking for, Cyclops can help. With our global contacts and huge stocklist, we can ensure competitive lead times and prices. Call us today on +44 (0) 1904 415 415, or email us at sales@cyclops-electronics.com

Categories
Electronic Components

Semiconductor industry and UK Government

The government has responded to a report released late last year on the UK semiconductor industry.

The report, released by the Business, Energy and Industrial Strategy (BEIS) Committee, details recommendations on how the UK semiconductor industry needs to improve to keep up with global development. It also emphasises the urgency to publish the UK’s long-awaited semiconductor strategy.

The Department of Digital, Culture, Media & Sport (DCMS) released the response to the report in early February. It is the latest in a chain of government responses to increased calls for government support for the semiconductor industry.

The response

Some of the main points covered in the response included:

·         The UK is currently working with international allies to guarantee and safeguard the security of the UK chip supply

·         It is important to protect the UK semiconductor industry from external national security threats

·         Cooperation and communication between the industry and the government should be established and maintained

·         The UK should not try and be self-sufficient, but should focus on its strengths and form partnerships to complete the supply chain

Among other topics discussed in the response is the recent purchase of Newport Wafer Fab by Nexperia. Due to certain concerns, Nexperia has been asked by the BEIS to sell 86% or more of the fab. The DCMS declined to comment any further on the matter because of future potential judicial review proceedings.

On a final note the DCMS said it would work closely with all government departments, the BEIS and the Department for International Trade to make the publication and execution of the UK’s semiconductor strategy successful for the industry. The response did not, however, give a timeline for when to expect the long-anticipated strategy.

A quick recap

The UK semiconductor strategy has been in the works for around two years at this point. It is yet to be released. Apparently, it was due to be published in November 2022, but there is still no sign of it.

Many tech-oriented organisations, committees and unions are calling for more urgency on the part of the government. Even before the strategy was announced, people were petitioning for more funding and priority on the UK’s chip industry.

Days after the government response was published, the BEIS, who submitted the original report, was disbanded by the Prime Minister. It has been replaced with the Department of Energy Security and Net Zero

There is still much anticipation for the coming semiconductor industry strategy and the changes it may bring.

Global presence

 

Cyclops’s office is based in the UK, but we have a global network of offices and partners here for you. No matter what component you’re looking for, we can help. Contact Cyclops today on +44 (0) 1904 415 415, or email us at sales@cyclops-electronics.com

Categories
Component Shortage Electronic Components Supply Chain

Cyclops Electronics – Looking back on 2022

Cyclops Electronics has had a monumental year. With a hugely successful Electronica, an exciting business acquisition, and plenty of special team moments to remember. 2022 has made its mark in style.

 

Team wide fun and games

This year we have initiated a weekly delivery of fresh fruit for all of the office to enjoy. It has proved to be a big hit and a great boost of natural goodness into the working day. It’s the perfect antidote to our regular pizza days.

For Stress awareness month in April, we organised picnic lunches for everyone and raffled off a wellness hamper.

At Halloween we stirred up a right cauldron of treats, a quiz curated by a staff member, and a Mummy wrapping game to get everyone in the spooky spirit.

We also celebrated Valentine’s Day, Wimbledon, and most recently the World Cup with full office decoration and goodies on tap. To mark the festive period hot chocolate and mince pies are now a permanent fixture in our kitchen.

Christmas fundraising has been great fun, supporting ‘Save the Children’ with Christmas jumper day and producing a sizeable contribution to a worthy cause.

 

Halfin

In April the Cyclops Group officially announced the acquisition of Belgium-based company Halfin Electronics. Shared values of collaboration, family values and dedicated professionalism made it a natural fit for the Group.

Halfin has enabled Cyclops to add Belgium to its list of international offices, including USA, China, Canada, Italy and Portugal.

The business was established in 1946, and has since built a global clientele and a speciality in vacuum tubes and other niche electronic products. It has been a wonderful addition to the Cyclops family.

Electronica

Electronica was the event of the year for all of us here at Cyclops. A team of nine staff from a range of departments attended the event. Aside from meeting a plethora of new customers, we also caught up with a lot of returning customers. The event was very important to us, since there hasn’t been an in-person Electronica since 2018. We were eager to reconnect with clients and businesses.

Not only did the team make lasting connections with businesses there, but were able to bond as a team and successfully run a trade fair stand. We’re so proud of them for continuing a Cyclops tradition that has been in place for decades.

And finally… 

A few words from our Sales and Marketing Manager, Ros Shaw:

“2022, what a year it has been… looking back at heatwaves, weather extremes, component shortages, supply chain disruption, political turmoil, economic uncertainties and more shortages, it’s been another eventful one. But one constant remains and that is that the Cyclops Team have delivered, day in and day out.

It was a real highlight of our year to chat with many of our appreciative customers at Electronica in Munich. Sharing plans for the New Year, developing strategies for sourcing in 2023 and discussing upcoming projects has enabled us to prepare. And that’s what it’s always been about, preparing and equipping the business to best serve the needs of our customers. Now more than ever we strive to adapt, evolve and innovate to keep stride with this fast-paced world.

We look forward to ranking highly on your ‘most useful’ list this time next year. Thank you for including us in your team. Here’s to 2023 and all of its adventures.”

 

Categories
Electronic Components

Supply chain adaptability

Connectivity within our supply chain is a positive thing. It has given us access to resources from all over the world, boosting production and sourcing. However, covid and other factors have highlighted the risk that comes with having a globally connected supply chain.

If covid was the only concern, though, the supply chain would have recovered by now. The general increase in supply and demand has also left the industry struggling to catch up.

If there is a disruption to one area of the supply chain, this is then passed down the line to customers. At every step of the supply chain, the delays are exacerbated and impacts the economy.

Connectivity and interdependence have always been essential in the electronics industry, whether it is relying on other countries for materials or working with international foundries on production.

Certain countries had, and some still have, covid-related restrictions in place to stop the potential spread. This means that plants in those countries have had difficulty keeping up with demand. As one of the biggest exporters of electronics is also in this position, some countries are choosing to transition away from working with them.

Some large companies have already made the decision to move their base of operations to mitigate this risk in the future. This has the potential to massively shift industry dynamics and encourage other businesses to make similar moves.

Funding is being allocated by some governments to facilitate nearshoring or reshoring of companies, which would bolster the supply chain. Many countries, including the US, UK and India, are increasing the budget and support of domestic chip production. There will be several ongoing effects from this, including an increase in skilled workers, R&D and more in-house production.

Although this would be beneficial there would still need to be materials sourced from countries including places in turmoil. Even relocating a percentage of the supply chain will not resolve these sourcing conundrums. However, it would reduce shipping times and customs charges for the finished product, especially if production is closer to customers.

As much as it would be beneficial to reshore or nearshore production, it comes with certain risks. The cost of labour varies largely depending on location, as does the number of skilled workers. Additionally, the delay or difficulties associated with moving production halfway around the world will also be numerous.

Many countries have put measures and funds in place to encourage moves, but financial aid will only reach so far.

More than a long-term static solution, the supply chain needs to be flexible and adaptable. Supply, demand, and the world in general is very volatile right now. As such, suppliers and manufacturers will have to alter their ways of working accordingly.

Cyclops has the rare advantage of being able to source electronic components from all over the world. This, combined with our keen eye and careful inspection processes, means we can find and supply the components you need.

Call today on +44 (0) 1904 415 415 to speak to a member of our sales team, or contact us at sales@cyclops-electronics.com

Disclaimer: This blog is meant purely for educational or informational purposes and is in no way instructional.

Categories
Electronic Components Supply Chain Technology

Price hikes in the electronics industry

Chip prices will continue to increase, despite some component lead times improving. This is due to inflation, labour shortages, and scarcity of raw materials, among other things.

Intel was the latest company to announce price increases, which it will supposedly introduce at the end of this year. It joins firms including TSMC, Samsung, and Texas Instruments in raising the cost of its products.

As has become very clear, the pandemic contributed to supply shortages the world over. However, there have also been issues with labour shortages, material sourcing and the increasing costs of everything.

Reverse psychology?

Processors are increasing in price at Intel and other companies. It has been suggested that this actually may be due to oversupply. If the cost of the components is increased vendors are more likely to buy the stock before it occurs. As they stock up, Intel’s supply levels will decrease. This may lead to shortages in the long-term.

These increases are due to be introduced at the end of 2022, but people are suspicious it may happen sooner. If prices are instead increased in autumn, they can be discounted for events like Black Friday and Christmas.

War and price

Inflation is causing the price of materials to increase also, which inevitably would be passed down the supply chain. The price of raw materials was always going to increase over time, but the conflict in Ukraine has exacerbated this. Gases like neon, which is used in semiconductor production, is almost wholly (70%) sourced by Ukraine. Similarly, 40% of krypton gas is also from Ukraine, which is in conflict with Russia.

Aside from these materials, the price of lithium, cobalt and nickel, used for EV batteries, is also rising. The EV industry already had price hikes when the pandemic began, when the chip shortage took its toll. Now, following the 15% increase in 2021, automakers are facing another potential price increase.

Expansion

One of the largest players in the industry, TSMC, announced its price increases would take place in 2023. Despite not being as severe as first speculated, the 6% price increase will be enough that customers will notice.

Aside from the cost of raw materials, electricity and labour expenses, TSMC is also expanding. To fund this expansion it is increasing the price of fabrication.

Could we have stopped it?

Years before the pandemic, as far back as 2017, there were signs that a shortage was on its way. New technologies were mounting and other geopolitical difficulties were afoot. Even then, the best way to avoid this would have been to redesign the tech and improve the fabrication process. This would have been a time-consuming and expensive process, and whenever it happened it would result in delays and losses.

Conclusion

The amalgamation of all these factors will lead to lasting price increases for electronic components. Even if these prices are discounted in peak times like Black Friday or Christmas, suppliers will still have to deal with inflation and material shortages.

The expansion plans of some of the industry’s big players, and the cost of the tech to sustain them will also lead to price increases. How long the effects of these will last, we’ll have to wait and see.

Categories
Component Shortage Electronic Components Future Supply Chain Technology

Procurement executives concerned about digital innovation

Manufacturers are using digital advancements to battle current supply chain disruptions.

Almost all (97%) of those surveyed said they had significant disruptions in their direct materials supply chain.

67% said they were not confident that the technology can cope with the current or near-future challenges.

The most significant technology disadvantages seem to come with lack of visibility into supplier, ‘disjointed’ source-to-pay process with multiple systems, and a lack of spend reporting.

Even more (87%) said modernising the manufacturing procurement and supply chain takes precedence, and it is their biggest challenge yet. A further 92% said avoiding disruptions to their supply chain is their main goal for this year.

Among the main concerns for modernising the supply chain are potential disruptions during implementation, skills shortages, and scale and challenge of change management.

Around half of those surveyed (44%) predicted that the supply chain crisis would begin to calm by 2023. Significantly less (18%) thought it would reduce by the end of this year.

The study surveyed 233 senior procurement executives from US and UK manufacturing companies. It was commissioned by Ivalua, a spend management cloud provider.

See the original press release from Ivalua here.

While Covid-19 was seen as a factor in the supply chain instability, it was not the only culprit. Global supply chains had already been in a vulnerable position, partly due to factors like too much outsourcing and an overreliance on ‘just-in-time’ supply management.

What some are calling ‘outdated technologies’ are slowly being replaced in Industry 4.0. However, the implementation of tech like IoT, AI, machine learning and cloud computing is not a quick process.

The issue may be that this transition period would only further add to the current shortages rather than solving them in the short-term. Most companies are being deterred by this potential loss, and have been avoiding the change for as long as possible.

Whenever digital innovation comes, it will be a gradual and time-consuming process, but businesses will be better off for it.