In the wake of the systemic shocks brought on by COVID-19-related shortages, every major consumer of integrated circuit chips has been compelled to re-evaluate their procurement strategies, to look beyond minimising costs. We’ve previously discussed the shift from a “Just-In-Time” to a “Just-In-Case” inventory approach as manufacturers reassess the optimal level of chips to keep in stock. Under the “Just-In-Time” model, manufacturers minimized inventory to free up working capital. However, the “Just-In-Case” approach has underscored the value of maintaining a surplus as a protective measure against sudden supply disruptions. Having extra stock is in fact a good investment of that capital, as it provides a protective buffer against sudden shortages.
Billions of government dollars show that electronic components are now recognised worldwide as an essential resource
The post-pandemic shortages of components showed everyone something that we, and our customers, have known for years: that a reliable supply of electronic components is essential to the economies of all developed countries. The shortages left key manufacturing industries, such as the automotive and aerospace sectors, unable to manufacture.