In May, Dimensional Research took the pulse of 217 professionals charged with sourcing electronic components. Working for OEMs with 500 or more employees, these procurement specialists outlined some of the biggest sourcing issues that they’ve been dealing with as a result of the global pandemic, the subsequent supply chain interruptions and their antiquated technology systems.
In “2020 Trends in Electronic Sourcing,” the research firm discusses how issues like the growing range of “connected” products and fast product update cycles are creating a new set of challenges for electronics buyers. That is especially problematic now, in a challenging economy that has increased the importance of driving new business revenue and protecting margins.
The study highlights these broad effects of the COVID-19 pandemic:
- In addition to the related product launch impacts, 37% of companies surveyed said their overall component costs have increased.
- The same share said they are unable to fill customer orders.
- Nearly as many (35%) said they need to rework products to replace components that are no longer available.
- Slightly less than a third (31%) said they are now onboarding new suppliers without going through approved vendor qualification processes—increasing their risk.
- A fifth (20%) said they have an unusually high number of mistakes due to team members’ stress and distraction.
- Nearly as many (17%) said they have been forced to select lower-quality component options.
“Risk does not exist solely in post-product release endeavors,” the company stated in a press release. “Eighty percent of the lifetime risk and cost of a typical hardware product is decided during that product’s initial design. Companies need to examine what’s happening in the design phase because that’s where the disconnect often exists.”
Better Collaboration, Please
Ninety-one percent of survey respondents have experienced sourcing issues that have caused product launch delays and 81% have been forced to make costly spot buys due to product availability issues. “Launch delays are most common when components are critically important or products are changed frequently,” Dimensional Research points out. Finally, 93% say compliance negatively impacts their sourcing processes; aerospace and medical devices are most impacted by compliance requirements.
To offset these challenges, more sourcing professionals are focusing on early, effective collaboration among teams. And while 99% of buyers report direct benefits from early collaboration between engineering and sourcing teams, alignment between the two isn’t common practice for many organizations. According to the survey, 85% of procurement professionals say engineers select components that can’t be effectively sourced, and 95% agree that the path to solving component sourcing issues requires integration of engineering, sourcing and partners.
Antiquated technology is another roadblock that electronic buyers are running into right now, the survey found. Existing sourcing technology doesn’t deliver what electronic component sourcing requires, Dimensional Research found, and 89% of respondents reported challenges with existing applications used for sourcing electronic components. The other key tech-related findings include:
- 77% of electronics buyers say that their existing enterprise resource planning (ERP) and product lifecycle management (PLM) systems don’t fit their needs.
- 99% report challenges as a result of issues with sourcing applications.
- 81% report that their sourcing applications prevent the selection of optimal cost options.
- 99% say they would benefit from additional capabilities or sourcing applications.
- 91% say their companies could grow faster with more effective sourcing technology.
“New product introduction – NPI – is never easy, but the shortages experienced during the coronavirus pandemic have created a new set of challenges for manufacturers across the globe,” Steve Flagg of Supplyframe, which commissioned the research, said in the press release.
“This experience puts greater emphasis on the importance of building resilient supply chains,” Flagg continued. “That starts in the product design phase with a connected NPI process – enabling effective collaboration across sourcing, engineering, and manufacturing by injecting prescriptive intelligence at every decision point.”
