Posted on 31 Oct, 2019 by Neil Sharp
Avoiding disruption to the electronics manufacturing supply chain is an ongoing task that can be fraught with challenges - whether it's mitigating the impacts of natural disasters, predicting fluctuations in price, managing the effects of geopolitical instability or averting the risk of cyber attacks.
In this blog post we explore five key threats to the stability of the electronics manufacturing supply chain - and the steps that original equipment manufacturers (OEMs) and their outsourcing partners can take to minimise the impact of these risks.
1. Natural disasters
Natural disasters can have a devastating effect on the supply chain, be it due to delays or pauses in delivery, closed ports, interruptions to transportation, or inconsistency in supply and demand.
Hurricane Florence for, example, has been deemed the costliest storm to ever hit the US - causing substantial damage to warehouses and disruption to road and rail connections and impacting on the economy in excess of £135 billion.
And in Japan, the Tohuku earthquake and tsunami in 2011 was calculated to have cost the Japanese economy just shy of £170 billion. The effects of that natural disaster also resonated around the globe, with manufacturing facilities in the US (Nissan, Toyota, G.M. etc) being forced to temporarily shut down their operations.
The true impact of natural disasters is often difficult to predict, however there are some essential steps that OEMs and their EMS partners can put in place to aid preparedness and avoid lengthy disruption in the event that the worst does happen.
The first is to develop a disaster response plan and recovery process that provides detailed guidelines and directions for everyone responsible.
Maintaining consistent contact with external suppliers is also key - and ensuring that they have robust procedures in place to analyse risk, avoid potential problems and mitigate the effects of unforeseen events.
2. Price volatility
The unpredictability of the markets, together with fluctuations in the price of raw materials, can have a major impact on the cost of individual components within the supply chain.
Building up knowledge of market trends can be hugely beneficial in managing supply chain risk.
Detailed research and analysis can also be invaluable in helping to predict price variations - whether it's getting orders in early to avoid the impact of price rises, or slightly lowering inventory levels until the raw material price reduces.
3. Ignoring technology trends
As manufacturing processes get ever leaner, and customer expectations get more demanding, maintaining an agile and transparent electronics manufacturing supply chain has never been more important.
Being open to the benefits of new digital technologies will be essential for manufacturers who want to safeguard their supply chains, maintain the efficiency of their production processes and guarantee on-time delivery.
Harnessing the real-time analytics potential of Big Data for example, can enable companies to filter, organise and make sense of large amounts of information to support their supply chain strategies.
And intelligent software solutions can play a key role in helping companies to accurately plan for, and forecast, future demand.
4. Changing governmental regulations
Keeping abreast of new governmental regulations and changes to existing legislation is an ongoing responsibility for ensuring supply chain stability.
We've written previously, for example, about the importance of getting to grips with two key European Union directives - the restriction of Hazardous Substances Directive (RoHS) and the Registration Evaluation, Authorisation and Restriction of Chemicals (REACH).
5. Cyber theft
The threat of cyber attacks continues to be a growing concern for the electronics manufacturing industry.
And a 2018 report from Supply Chain Insights provided a compelling overview - with cyber crime being listed as one of the top three events to impact on global supply chains over the past five years.
As the amount of data flowing through the supply chain continues to grow it's ever more important for companies to safeguard their IP assets.
Fortunately though, there are some substantial changes that can be made at grassroots level - starting with the educating of company employees on the risks of security threats such as phishing emails, personal computer theft and password breaches.
As networks become smarter and more complex, the risk of supply chain disruption is an ever-present threat - whether it occurs on a small or large scale, or is due to internal or external factors.
The extent to which manufacturers are able to plan ahead, to predict the "what ifs" - and to react swiftly to changing conditions - will be key in safeguarding productivity, reliability and on-time delivery
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