October 15, 2013

Converge Discusses Cause and Action for Shortages

In the electronics component, industry shortages are often unpredictable and can happen for many different reasons. Most long-standing companies tend have a backup plan in place to address times of shortage. However, for companies without a plan for the inevitable, there are several factors to consider.

Shortages can arise if...

  • There is a reduction in production due to increases in manufacturing costs, a material shortage or a downsizing of workforce.
  • A new technology/component is introduced into the market, making the older versions either hard-to-find, end-of-life or obsolete.
  • There are seasonal demands and/or inaccurate forecasting.
  • A major OEM’s production line shuts down due to a natural disaster or unforeseen event.
In times of shortage, desperate times call for desperate measures. Out of necessity, manufacturers search for supply in the open market through brokers or independent distributors. Typically, if they have adequate resources, they can employ their own market intelligence and planning to secure product at the onset of an unforeseen event. But what if they don’t? What are some options?
  • Manufacturers can try to procure components in the open market on their own through brokers or distributors, but this option can be extremely risky and costly.
  • Manufacturers can also compile an approved vendor list should the primary source have long lead times or no product availability to fulfill their demand. However, dedicating internal resources to this process can be time-consuming and costly.
  • Another option is to partner with a reputable independent distributor, like Converge, which has an established market intelligence network in place; reliable, trusted relationships with approved vendors in the open market; a team of expert commodity managers available 24/7; a global footprint; and a rigorous quality control and inspection process.
The bottom line is there are so many factors that can quickly influence supply and demand in the market. Why not be prepared and partner with an independent distributor with over 30 years of experience in dealing with electronics component shortages?

For more information on our shortage solutions, please contact us at info@converge.com.