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.
For years, the Just In Time (“JIT”) strategy was seen as the ideal model for electronic components. Then the world got complicated in ways no-one saw coming, with COVID lockdowns, international trade tensions between the US and China, and the Ukraine war. The lack of resilience in JIT became a major problem. Major motor manufacturers had to shut their production lines, due to lack of components. This led to a new strategy, Just In Case (“JIC”), to replace JIT .
Most companies that purchase electronic components are find that shortages are becoming more and more common, just as more industry sectors become reliant on those components. Here’s why. (more…)
There are many ways of sourcing electronic components. Manufacturers recommend that you use their recommended distributors, but that’s not always possible, especially for small quantities and obsolete components.
If you work in purchasing for an electronics company you may receive a regular supply of spam emails from overseas distributors: most people are wise enough to delete these on sight. Components can be sourced on EBay. Searching eBAY for STM8S005C6T6, a popular microcontroller from STMicroelectronics, returns 20 or more suppliers, mostly in China. (more…)