How can OEMs ensure quality supply chain management?

Posted on 07 Mar, 2019
Location/Department: Supply Chain

quality-supply-chain-management-blog

Maintaining quality, flexibility and consistency in the supply chain is an ever-present challenge for electronics manufacturers.

And even more so as they seek to fulfil the consumer demand for high-performing, affordable electronics.

When it comes to the production of electrical or electronic equipment, Original Equipment Manufacturers (OEMs) and their assembly partners are always mindful of paying close attention to the availability of raw materials.

In this blog post we explore the application of raw materials within electronic devices and how unpredictability within the supply chain can impact production.

The squeeze on raw commodities

Some forms of ceramics are used to protect electrical components and make excellent insulators. While different forms of plastics are moulded into the casings and coatings of products.

And precious metals such as copper, lithium, tin, aluminium, silver and gold provide necessary protection for the inner workings of electronic devices.

Personal computers and electronic devices contain computer processors, circuit boards and cables that are comprised of an array of highly conductive metals.  

More than half of the workings of a typical personal computer are composed of metals, with a substantial quantity of copper being required to produce circuit boards.

The global copper market is predicted to become increasingly under-supplied over the next decade, with a forecast from BMO estimating a 7 million tonne shortfall by 2025. 

Add to the equation the fact that copper mines require approximately 1900 litres of water per second of operation, and even water itself represents a significant commodity for the electronics manufacturing industry.

Supply chain risk

Unexpected events such as military incidents and natural disasters can result in a reduction or interruption in the supply of raw materials. The price volatility of essential raw commodities such as oil, copper and tantalum is also an ongoing issue for the electronics manufacturing sector.

The changing demand and supply for these products can drastically and rapidly affect their price, which can create challenging pain-points for companies.

As the cost of raw materials becomes prohibitive one solution is to identify suitable substitutes, but with this comes the challenge of ensuring ethical provenance and environmental sustainability.

Equally too, there's a drive among manufacturers to seek out better technologies, materials and chemical compounds to fulfil the demand for high quality, affordable electronics.

Challenges to manufacturers

An increasing recognition of the importance of the product quality of raw materials has been highlighted in the findings of a recent survey of 200 UK manufacturers across a wide variety of sectors, and released by the Professional Division at electronics manufacturer Miele.

The report reveals that just under a third of all respondents consider the difficulty of access to raw materials as being their biggest obstacle to achieving product quality and company growth over the next five years.

Ethical sourcing also remains a concern, as companies seek to ensure the provenance of their trading initiatives, that the products they produce are manufactured safely and that subsequent impact on the environment is reduced.

Delivering on time was identified as another significant issue by 27% of manufacturers. While the importance of reducing time to market and meeting customer expectations was highlighted by 26% of respondents.

The report also highlighted the importance of recognising that product quality is addressed at every stage of the business - from the sourcing of raw materials through sales, marketing and post-sales customer service.

For OEMs the ongoing challenge is to reduce the risk of their raw material suppliers, to maintain better control of pricing and ensure availability.

For those who have opted to hand over supply chain control to an EMS provider, there is the reassurance of knowing that your assembly partner will take charge of securing the levels of stock you need and of seeking out alternative components if need be.

But there is still the need to maintain close contact and cooperation with your contract manufacturer, to be ready to respond to price and lead-times issues quickly and to stay up to speed with changes within the component market.

What's certain is that a closer relationship between OEMs, their EMS partners and other third-party service providers is going to be even more critical in today's increasingly competitive environment.

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