The way we do business is still being impacted by the COVID-19 pandemic. Other factors including war and financial shocks are combining to create a long tail in terms of supply chain disruptions and logistics.
Contributing factors include:
- Raw Material Shortages: Due international disruptions to mining, the supply of raw materials for manufacturing electronics has been in short supply.
- Reduced Manufacturing Output: Many manufacturers are not operating at full capacity. Staff shortages, market uncertainty, COVID restrictions and a shift towards manufacturing-to-order (see below) all play a part.
- Stock On Hand: Supply chain participants have drastically reduced their on hand inventory. Why? They are unwilling to risk being caught with excess stock should demand suddenly drop again. This impacts availability and cost.
- Manufacturing To Order: Companies are producing more items on a ‘by order’ basis and holding less stock on hand. When customers place an order for items previously available ‘off the shelf’, they now need to factor manufacturing and shipping process into their lead times.
- Shipping Delays: There is currently a shortage of shipping containers compounded by restricted access to ports. This is resulting in longer shipping timelines and increased costs, with huge premiums being commanded for priority delivery. When importing items it is now necessary to factor additional costs and time.
In short, the net result is that supply chain disruptions mean increased costs and significant delays.
Our advice to clients is to budget carefully and plan early. Communicate with solutions partners such as datmedia at those early stages.
Advance notice helps us negotiate the best rates and availability with suppliers. Therefore we can deliver projects on time and on budget as often as possible.