Here’s a sobering number: 53 percent of electronics industry product launches have been delayed or canceled due to the pandemic.
That’s according to a market study commissioned and released this week by Supplyframe, a vendor of electronic design, manufacturing and supply chain services. The electronics sourcing study conducted by Dimensional Research also indicates that global supply chain disruptions attributed to Covid-19 have significantly driven up component costs.
Further, electronic product re-designs around component shortages also have increased. That means product designs must now be “de-risked” early in the design cycle.
“Eighty percent of the lifetime risk and cost of a typical hardware product is decided during that product’s design process,” said Steve Flagg, Supplyframe’s CEO and founder. “Companies need to examine what’s happening in the design phase because that’s where the disconnect often exists.”
The cumulative number above gets worse when looking at product delays alone: The study found that 91 percent of electronics manufacturers surveyed said sourcing issues resulted in delayed product launches. A greater number agreed OEMs must integrate engineering, sourcing and suppliers to overcome pandemic-driven components shortages.
With more than one-third of respondents saying overall component costs are rising, an equal number said rising bills-of-material are forcing them to rework designs to replace parts no longer available. A similar percentage said they were simply unable to fill customer orders.
The “de-risking” of products designs may be offset by risky survival strategies such as setting aside approved vendor processes to bring in new suppliers. Thirty-one percent of OEMs surveyed said they are operating without a safety net. Others said they have been forced to use lower-quality components to fulfill customer orders.
Meanwhile, the survey found Covid-related stress and distractions have increased design and production mistakes.
Certainly, vendor studies more often than not conclude that their’s happens to be the best platform or service for solving a particular problem. Supplyframe’s is no different, highlighting the importance of collaboration among engineers, procurement and sourcing departments. That, of course, can be made easier through its market intelligence and real-time inventory tools in the form of “vertical” search engines and supply chain monitoring.
Clearly, electronic product manufacturers heavily reliant on Chinese and other Asian component sources find themselves in a bind. That’s unlikely to change until supply chains can be reconfigured and scaled to meet the industrial demands of a post-pandemic economy.
The findings of the Supplyframe study are based on 217 responses to an online survey by supply chain managers at OEMs with at least 500 employees.