In 2020, the EMS (electronics manufacturing services) sector stress-tested the importance of components to consumer visibility in the supply chain. When COVID-19 started to impact component manufacturers in Asia, supply of certain components started running low as plants were shut down. As a result, component prices increased, and air capacity being removed from the APAC trade lane then increased freight costs to record highs. To counter supply shortages, buyers started forward-stocking critical components, as well as asking vendors to store stock closer to manufacturers. Inventories in warehouses ballooned with the wrong components, and numerous companies fell short on critical components. Historical sales models did not account for a major pandemic, which left many supply chains wondering how much to build. A common discussion topic in many boardrooms has been how much to ship and to which channels.
Given the impact of COVID-19 in 2020, it is clear that digitalization and higher quality data should be major initiatives for supply chains in 2021. Disruptions like COVID-19 allow companies to take a step back and reevaluate the component-to-consumer supply chain to identify previously unforeseen problems.
Lessons learned can be summed up in three major categories: lack of data, lack of communication, and lack of resources. With the proper technology, solutions are available to overcome these supply chain challenges. Clients will be able to balance inventory between major channels, make smarter component purchasing decisions, keep product in stock, and — most importantly — not lose out on the sale.