Page 7 - EngineerIT April 2022

ELECTRONICS

Upturn in component order books,

but long lead times

hile the manufacturers reduces inventory costs. This method
and suppliers of electronic requires producers to forecast demand
Wcomponents have seen a high accurately. While financially sound in
surge in their order books, lead times have normal times, when a pandemic hits, it
been increasing. In 2021, the component bites manufacturers.
manufacturing industry showed a growth “The idea of developing a product
in sales of 20%, and they are predicting a around a specific new device is today
further 11% increase this year. However, fraught with many additional challenges”,
little has happened to reduce the lead Taute said. “Firstly, by the time one is
times and for some devices, this can be ready to go into production, the device
longer than a year. may have been superseded, often
On the back of these solid sales requiring updates to the design. If one
figures, the book to bill ratios have also is fortunate, the footprint may be the
been very positive. For interconnect, same as the original device and may only
passive and electro-mechanical require changes in the software. In many
components, the book to bill has been cases it may require a totally new design.
1.4. For semi-conductor components the Secondly, in the current situation, the lead
book to bill ratio has been around 1.8. This times may be so long that the new product
is an indicator that demand will continue is no longer what the market demands. Hannes Taute
to grow in the foreseeable future and This is changing the entire landscape.
possibly result in even longer lead-times. New designs have to be developed around countries as there is no return shipping.
The pandemic and repeated lockdowns a specific set of components and orders The extraordinary increases in shipping
caused component manufacturers, in line placed and delivery dates confirmed. costs have created cost pressures, adding
with many other industries, to reduce This means that electronic equipment to the cost of components, Taute said.
their production and put any expansion manufacturers have to make much larger “Currently it is difficult for an
plans on hold. It is a debatable point as investments. electronic equipment producer to contract
to whether they took the right decision, for a fixed price, as by the time the
as previous downturns and disasters were Surge in manufacture of electric equipment is delivered, the input cost
always followed by massive upturns. Many vehicles increases the supply chain could have been higher than the selling
believe it was a short-sighted decision. timelines price.”
“The industry is now playing catch Manufacturers of motor vehicles are “As a major distributor of electronic
up and it is likely to take a year or longer not helping to ease the supply chain components in South Africa, TRX has
before we can expect supplies to return to lead times. Today’s vehicles have a large been fortunate to have major distributors,
some normality”, said Hannes Taute, MD electronic sub-system in their design TTI and Mouser Electronics , which
of TRX Electronics. and are also affected by component have kept their fingers on the pulse. As
For many years, electronics equipment shortages; many had to therefore curtail major players, TTI and Mouser have an
manufacturers have practiced the their production output. The upturn in advantage and are often able to negotiate
principle of “just-in-time” procurement. the manufacture of electric vehicles has shorter lead times to the advantage to our
The just-in-time (JIT) inventory system is further added to the problem. customers.
a management strategy that aligns raw Both TTI and Mouser are often able
material orders from suppliers directly Shipping still a constraint to source products that our competitors
with production schedules. Companies The lack of an adequate number of cannot get. We continue to provide
employ this inventory strategy to containers and still-limited availability fair market prices and because of our
increase efficiency and decrease waste of shipping has further added to the flexibility, we are often able to help our
by receiving goods only as they need problem. Containers delivered before the customers solve their component sourcing
them for the production process, which Covid-19 pandemic are still stuck in many problems”, Taute said. n

EngineerIT | April 2022 | 5