Quarter 3 Electronic Component Market Conditions Update

Is the contraints story real? Why yes, it is! Every day our purchasing department, along with every purchasing department in the EMS Industry, is working diligently to ensure components are available to continue the production of our customer’s products. Changing prices and availability by the hour is not an uncommon phenomenon. The material constraint has not left one country or one consumer untouched. There will not be much relief experienced with continued demand, Covid shutdowns, transportation challenges, and increase pricing. As Burton Industries continues to look forward to problem-solving solutions, our customers continue to move their products to market.

Attached is a summary of component lead times and pricing trends referenced from the “Future Market Conditions Report” for Quarter 3, 2021.

-Batteries:  Stable pricing and stable lead times 16-24 weeks

-Connectivity:

               -Wi-Fi Modules: Mix of stable pricing with some increased lead times: 20-30 weeks

               -Bluetooth Modules: Increase pricing with significant increase in lead times: 24-52 weeks

-Discretes: Pricing and lead times increasing across the board.

-Electromechanical:

               -Switches: Stable pricing and lead times 10-24 weeks

               -Fans: Mix of increased pricing with stable lead times 12-26 weeks

-High End:

               -Microchip: No change on lead time and continued increased pricing for MCU (8 bit & 32 bit), PHY/Ethernet, USB,  and 32 bit MPU 30-55 weeks

               -NXP: Pricing increase for 8 bit MCU, Automotive, and Network Processors. Increase in lead times for all above including 32 bit MCU. Automotive allocation and 26-52 weeks on the rest.

               -Renesas: Stable lead times and pricing Automotive, increase of lead times and pricing on 8 bit MCU, stable lead times with increased pricing for 32 bit MPU, and increased lead times and steady pricing for 32 bit MCU. Average lead times 30 weeks

               -STI: Allocation on 8 bit MCU, Automotive, and 32 bit MCU with increased pricing. 32 bit MPU has increase in lead time and pricing  20-26 weeks

Passives:

               -Trimmers & Pots: increased pricing and lead times 10-20 weeks

-Electrolytic: Significant increase in lead times with increased pricing. Lead times 18-49 weeks

-Capacitors (film): Mix of stable pricing with stable lead times of 12-36 weeks

-Capacitors (tantalum): Mix of stable pricing with increased lead times  20-50 weeks

-Capacitors (polymer tantalum): Mix of stable pricing with mix of lead times 20-30 weeks

-Filters: Mix of stable pricing and increased lead times 20- 26 weeks

-Inductors: Mix of stable pricing and increased lead times 14-40 weeks

-Fixed Resistors: Increased pricing and stable lead times 30-52 weeks

-Resistor Networks: Increased pricing and stable lead times 15-40 weeks

-Surface Mount General Capacitors (ceramic):  Overall, pricing steady with lead times of 20-28 weeks

At Burton Industries, our team continues to look at alternative solutions to all component shortages. If we cannot source the part due to availability, price, or lead time; we look at additional vendors outside our supply chain. If we continue to have issues, we issue an ECR (Engineering Change Request). Our engineers will work with your engineers to redesign and engineer the PCB assembly. The goal with an ECR is to change the engineering of the product to ensure the components needed are available and there is no compromise to the quality of the product.

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Quarter 2 2021 Burton Industries Newsletter

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Quarter 2 Electronic Component Market Conditions Update

We have all read and heard about the supply chain issues over the past few months. Now, the reality is setting in with shortages and allocations. These shortages did not start with the pandemic but have been coming for some time. And these shortages are not going to end any time soon. It will take billions of dollars of investment in infrastructure to expand production. The root cause changes with every article you read, the podcast you listen to, or the daily newscast. The concepts of legacy supply chain principles are no longer relevant. Lean inventory, Just-in-time Inventory Management, and Kanbans are becoming obsolete in many industries.

No matter the blame, we look forward to the future and produce solutions. Here at Burton Industries, we lose sleep over our customer’s success and future growth. We are pivoting quickly from legacy supply chain principles to resilient supply chain practices. Let us guide you through this strained time. We will keep you moving forward and put plans in place for future projects.

Attached is a summary of component lead times and pricing trends referenced from the “Futures Market Conditions Report” for Quarter 2- 2021.

-Discretes: Pricing and lead times increasing across the board.

-Surface Mount General Capacitors (ceramic):  Overall, pricing steady with lead times of 18-48 weeks

-Passives: Mix of increasing pricing and lead times with many moving into the red category.

               -Trimmers & Pots: increased pricing and lead times 10-12 weeks

-Electrolytic: Increasing lead times with a mix of increased pricing. Lead times 14-32 weeks

-Capacitors (film): Mix of stable pricing with stable lead times of 10-36 weeks

-Capacitors (tantalum): Mix of stable pricing with increased lead times  4-46 weeks

-Capacitors (polymer tantalum): Mix of stable pricing with mix of lead times 20-30 weeks

-Filters: Mix of stable pricing and increased lead times 20- 40 weeks

-Inductors: Mix of stable pricing and increased lead times 12-30 weeks

-Fixed Resistors: Increased pricing and increased lead times 30-52+ weeks

-Resistor Networks: Increased pricing and increased lead times 15-40 weeks

-Batteries:  Stable pricing and stable lead times 8-38 weeks

-Electromechanical:

-Switches: Mix of stable pricing with increased lead times 10-18 weeks

-Fans: Stable pricing with mix of increased lead times 12-24 weeks

-Connectivity:

               -Wi-Fi modules: Increase pricing and increased lead times 24-30 weeks

               -Bluetooth modules: Mix of stable pricing with increased lead times 16-30 weeks

High End:

               -Microchip: Lead time and pricing increases for MCU (8 bit & 32 bit), PHY/Ethernet, USB, and 32 bit MPU 30-55 weeks

               -NXP: Pricing increase for 8 bit MCU, Automotive, 32 bit MPU, and Network Processors. Increase in lead times for all above including 32 bit MCU. Automotive allocation and 26-52 weeks on the rest

               -Renesas: Stable lead times and pricing Automotive, increase of lead times and pricing on 8 bit MCU, increasing lead times with steady pricing for 32 bit MCU, and steady lead times and increased pricing for 32 bit MPU. Average lead times 30 weeks

               -ST: Increased pricing and lead times for 32 bit MCU and allocation for 8 bit MCU, 32 bit MCU, and Automotive.

Our supply chain team is reviewing contraints reports daily to ensure fast action as conditions change. When new contraints are identified, purchasing, program management and engineering review options for alternate suppliers and/or substitutes. Watch our blog for further updates on trends and the tools we are using to address availability issues and pricing increases.

Optimum Flexibility at Competitive Cost: Four Key Areas to Analyze

Supporting variable demand and staying flexible in production schedules to serve our customers takes a multifaceted approach. This article covers the four areas that synergize at Burton Industries to ensure every customer receives their product when they need it.

As systems have evolved to have real-time visibility for raw material availability, demand predictions, and production status, sourcing teams have shortened the supply chain pipeline to minimize the amount of raw material and finished goods carried in inventory. For products that have a predictable demand and forecasting, the order process is simple. A Supply Chain Management strategy that includes finished goods Kanban will accommodate products with less predictable demand. However, products with variable demand often contain hidden costs. Also, the current state of component constraints can lead to empty shelves. If a contract manufacturer is experienced in high-mix and variable demand products, minimizing costs and continued production will occur. In a stable materials market, one strategy is to carry finished goods to Kanban. A better approach involves working with the EMS provider to create a system that provides the needed flexibility but minimizes added costs associated with material or finished goods.

Design for Procurement (DFP)
Design for Manufacturability (DFM) and Testability (DFT) are frequent practices in new product design. These practices can lead to a decrease in hidden costs in production and test. However, this analysis does not ensure the approved vendor list (AVL) and component specifications are set right for variable demand. Design for Procurement or DFP focuses on minimizing the number of unique parts required, minimizing customization. An Engineering Change Request (ECR) is complete during the DFP process. This process ensures a broader range of supplier choices. Additional benefits of DFP and an ECR can include better pricing, reduced inventory line items, and improved quality. At a product development level, DFP focus should incorporate:

DFP can be more challenging in legacy products, as redesign options may be limited. That said, redesign provides cost benefits in the following areas:

“They are very good with obsolescence. They are very proactive to reach out and suggest changes to our projects.” Burton Industries Industrial Controls customer

Supply Chain Management and DFM are very closely linked. The core group of suppliers used is willing to support DFM and DFP efforts. These suppliers include custom part commodities such as printed circuit boards, metal fabricated parts, and plastics.

Forecasting & Program Management
While it is not unusual for larger OEMs to have a comprehensive forecasting method for outsourcing, smaller OEMs often do not have a formal process. The Program Management function at Burton Industries addresses forecasting in the initial program setup. The Program Manager will evaluate the OEM’s initial demand projections against historical trends and ordering patterns. The goal is to set a system that is as transparent as possible on both sides where variations in demand are noticed quickly and addressed.

“Burton reacts to our needs better than all of the rest. They understand us better than all of the rest.” Burton Industries Building Controls customer

Inventory and Stocking Programs
Stocking Programs are one way to provide reasonable flexibility at optimum cost. Stocking agreements at the raw material level are a way to ensure sufficient stock is on hand to meet unanticipated production upsides. A crucial element of this strategy revolves around supply chain relationships. Supplier selection looks closely at the supplier’s willingness to be flexible in each program. Regional EMS providers with secure supply chain relationships may have a greater ability to support variable demand in their customer’s programs because the bulk of their business involves variable demand in mid-range volumes. At Burton Industries, custom component suppliers have created optimum minimum lot sizes for their typical customer program volumes. This practice also includes pre-set bonds on high-risk components. Finished goods Kanbans are developed on an as-needed basis, provided a master ordering agreement is in place.

Production Throughput & Flexibility
Factories with lengthy frozen production windows or manufacturing equipment optimized for high volume production are often inefficient at serving customers with variable demand. Changes in demand often translate to missed deliveries. The speed at which orders move through a factory also helps reduce lead-time in addressing variations in demand. Additionally, facilities driving high throughput through LEAN manufacturing typically eliminated hidden costs and quality issues. At Burton Industries, the goal is for production orders to be complete within two-to-three weeks of material availability. The lead times are customer-defined and built out as ordered, rather than stocked as a partial build to be completed based on actual demand. This process eliminates the cost of supplying subassemblies plus the risk that engineering change orders (ECO) could drive rework of that inventory.

Achieving high throughput and flexibility involves several areas of focus:

“Their entire team is very friendly and extremely flexible. They are very flexible with schedule changes, support, answering questions and guidance. From their program manager to their engineers, they take the time to work with us and answer our questions. they are very responsive. “ Burton Industries Medical Industry Customer

At the regional EMS level, achieving optimum flexibility at competitive cost requires a multi-point strategy. This strategy needs to include transparency among customers, the EMS company, and the supply chain. Key areas to analyze in selecting an EMS company capable of supporting variable demand consists of engineering resources, program management competencies, production area efficiencies, and supply chain relationships.

Burton Industries specializes in high mix, variable demand projects on PCB assemblies and Higher-Level assemblies. This support includes full product lifecycle support from product development through end market support services. Production facilities are certified ISO 9001 and ISO 13485, lead-free processes, and Electrostatic Discharge (ESD) Control program. Follow Burton Industries on LinkedIn, Facebook, or Twitter. New website coming soon!

September Anniversaries

Nothing in this world is more valuable to an employer than an employee who is both loyal and hardworking!

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We ask our employees why they work for Burton–here is a sample of what they said….

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August Anniversaries

“With team members like you, it becomes easier for the company to achieve it’s goals”! unknown author
#burtonems #burtonindustries #ems #contractmanufacutrer #pcbausa

Way to go Sheri on Your Promotion!

Sheri has recently been promoted to Shipping Lead. Welcome back to the area and thank you for joining our team!

Congratulations Ashley on your Promotion!

#burtonindustries #pcbusa #ems #contractmanufacturer

Happy Retirement Mary!

Burton Industries EMS Product Development & Engineering Services

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