Our entire industry is experiencing unprecedented levels of disruption, as shockwaves from the largest pandemic in almost a century continue to hit. TThe need to ship vital medical equipment and instrumentation is intensifying on a daily basis - and production sites, along with the supporting distribution channels, must respond accordingly.
This calls for a radical upheaval of what had previously seemed to be extremely effective business models. The rules of this particular game just got switched around.
Over the last two decades, the global electronics ecosystem had been gradually altering the way in which it fundamentally worked. In order to prevent having to tie up large quantities of capital (and the financial risks that came with that), it had shifted further and further towards what was predominantly a build-to-order (BTO) culture. This has now become deeply ingrained within each stage of the supply chain, from the component vendors and their distribution partners, through to the equipment producers and the system integrators. Now, quite unexpectedly, everything we were once certain of is entirely different. The methodologies that have served the electronics business well for many years are no longer as applicable as they once were - and everyone involved must quickly adjust.
In the past, it was perfectly acceptable (and in most cases recommended) for equipment manufacturers, whatever market they were involved in, to follow a just-in-time (JIT) production strategy. This meant elevated operational efficiencies could be maintained, avoided excessive inventory being amassed and safeguarded against abrupt slumps in demand. All that was needed was access to accurate projections about what volume requirements were expected to be.
As a result the quantities of components that were freely available were generally not that high. Through the levels of stock they carry, component distributors have had an important role to play in preventing shortages. They have been able to provide some buffering on occasions