August 2018 Supply Chain Trends

We continue to see lead-times stretching out across a number of components. InAugust Trending Info general ceramic capacitors, we see allocation at many suppliers, increasing lead-times and price increases. In fixed resistors, RoHM is not accepting orders, PSC is heavily constrained and has 52+ week lead-times. At other manufacturers we are seeing lead-times range from 8-30 weeks. Tantalum capacitor lead-times have increased from 15 to 28 weeks. In MLCCs, Murata and TDK are on allocation. Lead-times in general are running 12-30 weeks. Automotive components are the most heavily affected. STMicro is increasing lead-times across the board on all their products. We’ve included a color-coded chart highlighting trends in all commodities as of end of August 2018.

Burton Industries’ customers can contact their CSR and request a current spreadsheet outlining these trends by component type and manufacturer.

Tariff Mitigation Case Study

 

DSC05352The first round of tariffs have kicked in on components originating in China. Our distribution partners are tracking this and billing the tariffs at the end of the month. We are auditing their charges against our records and are passing along these costs to customers.

We are also working to mitigate tariffs wherever possible. The software tools we have are helpful in identifying country of our origin and alternate sources. We are also identifying suppliers & quoting current custom parts not in China. Here is our most recent cost reduction example:

Tariff Mitigation Case Study

Recently a customer wishing to mitigate China-related tariffs asked us look at alternate suppliers. We were able to identify another Asian source outside of China. The end result was the part cost was reduced from 23 cents to 16 cents, which represented nearly a $35,000 annualized savings in addition to eliminating the tariff cost.

Addressing Materials Constraints

_FBP5218-2The team at Burton Industries recognizes a constrained market requires that we work as closely as possible with our customers and suppliers to keep products on schedule. We are tracking distribution partner performance. Those who are living up to commitments the majority of the time and being proactive in communicating impending issues are seeing the bulk of our spend.

We have a number of supply chain partners willing to carry bonded inventory for us and live up to their commitments. Bonded inventory gives customers maximum flexibility with minimum liability, because the majority of parts are in high demand and easy to restock should a forecast change. Where possible we are moving customers to these sources of bonded inventory, setting demand based on a 12-month forecast.

We are working to get all our volume production customers to give 26+ weeks of commitments based on component lead-times. We modify that expectation for customers with legacy products that are built on an as needed or a few times a year basis.

Here are a few tips to further mitigate component availability issues:

  • Put our design team in the design cycle from a Bill of Materials (BOM) standpoint as early as possible. We offer a free BOM scrub service to existing customers to help them assess risk in critical to design components.
  • Avoid single source parts or those with limited sources.
  • If a part has been labelled not recommended for new product use, it should also be avoided as its obsolescence risk is high.

Burton Industries’ Design Engineering team can help with all your component engineering related needs. Our pool of specialists can help you manage the increasingly complex development environments and offer full life cycle management with strong focus on cost savings and defect prevention. Capabilities include:

  • Product/PCB Design
  • PWB layout
  • Design for manufacturability (DFM)
  • Component selection assistance (alternative sourcing)
  • Development of manufacturing aids (fixtures, stencils, etc.)
  • RoHS conversion assistance
  • Product Lifecycle Management (PLM) recommendations