Pandemic-related component delays and shortages in the electronics industry are highlighting the need for more resilient supply chains, according to a recent study from market researcher Dimensional Research and tech firm Supplyframe.
The study found that more than half of electronics industry product launches have been delayed or cancelled due to pandemic-related challenges; it also found that the situation has led to increased component costs, the need to rework products, and an inability to fill customer orders.
“That is especially problematic now, in a challenging economy that has increased the importance of driving new business and protecting margins,” the researchers wrote.
Dimensional Research and Supplyframe conducted an online survey of 217 decision-makers responsible for sourcing electronic components at global manufacturers across high tech, industrial equipment, automotive, aerospace, and medical device companies with 500 or more employees. They found that the vast majority of respondents—91%—cite sourcing issues as the cause of product launch delays. An even greater share—95%—agreed that the path to solving component sourcing issues “requires integration of engineering, sourcing, finance, and supply chain teams, including external partners.”
“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, CEO and founder of Supplyframe, said in a statement announcing the findings. “This experience puts greater emphasis on the importance of building resilient supply chains. 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.”
Other key supply chain findings include:
- 37% of companies surveyed said their overall component costs have increased
- 37% also said that they are unable to fill customer orders.
- 35% said they need to rework products to replace components that are no longer available.
- 31% said they are now onboarding new suppliers without going through approved vendor qualification processes, increasing their risk.
- 20% said they have an unusually high number of mistakes due to team members’ stress and distraction.
- 17% said they have been forced to select lower-quality component options.
For more coverage of the coronavirus crisis and how it's affecting the supply chain, check out our Covid-19 landing page.
Gartner, Inc.
