Market Intelligence
July 7, 2022

3 Steps to Take When Electronic Supply Runs Dry

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The current global supply chain is not known for being a flexible system. Therefore, adaptability is a challenge that often falls on the customer.  

In the semiconductor industry, having a plan A, B and sometimes even C, in your back pocket can help businesses better navigate and pivot in an ever-changing market. The best way to devise a back-up plan is to identify alternative electronic components and partner with suppliers prepared to offer options. 

Matching supply with demand is no easy task. In a market roiled by end-of-life notices, extended lead times, price increases and obsolescence, it can be tricky to plan ahead. However, one of the ways to bolster your success is to be prepared with alternative options when preferred components suffer shortages. 

Step One – Create Detailed Specifications 

The first step in sourcing alternative electronic supply is having a fully developed specification for all product builds. Specifications dictate what is in the product, how the products are made, and essentially, whether the product will meet the needs of target consumers. Having transparency around specification data affords manufacturers and suppliers the ability to quickly pivot and not suffer delays in time to market schedules. 

Step Two – Identify Viable Alternatives 

After fully outlining product specifications, the next step will be identifying alternative options. When parts are unavailable or prices are too high, it's important to know which manufacturer has analogous components that will achieve the same result as plan A.  

As a result of extensive lead times and reduced availability, Mellanox increased the price of the MCX-6 series by 25%, a common outcome in times of inflation. The limited supply and increased prices pushed customers to Intel and Broadcom to secure allocation of similar components. Agile suppliers should accommodate these changes to ensure that their partners complete builds in time to meet consumer demand. 

However, sometimes a plan B isn’t enough. When supply of the standard STMicroelectronics ATM 8-bit MCU series was not predicted to improve, some customers tried to plan around the extensive wait times or find the parts through other resources. The manufacturer then announced the part was moving towards end-of-life status. Customers were advised to use the STM32 (32-bit) series instead, although it did require redesigning boards to accommodate the alternative. 

Step Three – Locate Sourcing Partners 

On top of having comparable components in mind, it is also beneficial to have access to multiple resources, including independent distributors. These distributors can assist during a crunch by cross-checking data sheets to review specifications and determine which parts work best as alternatives. Independent distributors can also help shorten lead times because of their strategic connections or find an electronic component at a more reasonable price outside of market price hikes. 

Flexibility Is Key 

There are no guarantees when it comes to timelines within the supply chain. One of the few things that can be counted on is the possibility of disruptions, which is why flexibility is paramount for success. Be prepared for shortages with detailed specifications, viable alternative components and suppliers that are ready to support those orders. It’s the best way to ensure you stay ahead of the curve -- and ahead of the competition. 

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