Stocking Arrangements to Mitigate Supply Chain Disruption

Common Stocking Arrangements to Minimize Supply Chain Disruption_Page_1Material constraints continue to add challenges to electronics manufacturing. That said, the team at Burton Industries has implemented stocking arrangements with many of our customers designed to ensure that product will be available even when spikes in end market demand or further changes in material availability impact forecast assumptions. Our latest whitepaper, Common Stocking Arrangements to Mitigate Supply Chain Disruption, looks at the types of stocking programs available and their benefits and potential challenges. Read the full paper here.

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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.

Supporting Variable Demand: Four Key Areas to Analyze

525123-Global SMT Jun_Burton Industries Variable Demand_Page_1As systems have created better real-time visibility in terms of end market demand trends, and raw material availability and production status in the supply chain, original equipment manufacturers (OEMs) have reduced finished goods inventory levels. The upside of reduced inventory is faster inventory turns and reduction of the non value-added costs associated with excess inventory. However, the downside is that a supply chain interruption or unanticipated spike in demand could result in empty shelves. One strategy to avoid that is simply to require the electronics manufacturing services (EMS) provider to carry a finished goods Kanban. However, pushing the costs of excess inventory safety stock down to the supplier doesn’t truly eliminate the cost. A better strategy involves working with the EMS provider to create a system that provides the needed flexibility, but minimizes the non value-added costs associated with material or finished goods in an extended “wait state.”

At Burton Industries, we have a number of customers with highly variable demand. The four areas our team focuses on optimizing to support variability efficiently are:

  • Design for procurement (DFP)
  • Forecasting
  • Stocking programs
  • Production throughput.

Read our latest article in Global SMT & Packaging which goes into more detail on this topic: Supporting Variable Demand: Four Key Areas to Analyze here.