The latest ESUK Reader Research confirms that one of our readers biggest concerns right now is Rising Lead times. Why is this?
As a result of the burgeoning IoT, automotive and mobile markets, lead-times and the rapid growth in Asian markets, many semiconductors and passive products are now exceeding 30 weeks, with some product lines stretching to over 50. It appears that most analysis and opinion suggests that growth in these markets will pick-up from the 2017 levels and continue to increase in 2018. Combine this with optimistic global GDP forecasts for Europe, China, Japan, and the United States, as well as an emerging Asian market and you start to see the extent of the problem.
Have extended Lead Times and allocation affected production runs at Esprit recently?
We’ve been on the front foot and tried to mitigate delays where possible. However, we have had a situation where a customer was faced with a considerable lead-time issue and was forced to redesign a PCB in order to ‘design out’ the problem parts issue. The redesign enabled the client to meet their customer requirements.
What strategy does Esprit have in place for extended Lead Times and do you relay extended Lead Times information through to your clients and what impact or involvement do they have?
Communication is key and we make sure that we provide our customers with timely relevant information.
We use market-leading software that analyses product lifecycles and aids part selection. This means that we’re able to suggest multiple manufacturers and if acceptable generic options.
We also work closely with our franchised distributor network to provide information on new projects. This allows for project lifecycles and launch dates to be discussed with both the distributor and the manufacturer and for realistic assessments to be made on the material availability.
In 2016 Esprit had the foresight to monitor the market closely in order to analyse trends. Armed with this research in Q1 2017 we met with our key suppliers and manufactures to learn their views on how the growth and demand would impact the marketplace.
This meant that we could enter into discussions regarding how best to support long-term contracts by identifying, isolating and finding solutions to issues.
Who is the major cause of Extended Lead Times? Principal Component Manufacturers or Distributors?
Component demand is soaring in line with the global IoT and automotive infotainment explosions. There’s also an increase in mobile and industrial markets, and when supplies are tight these big spending customers are going to demand to move to the front of the line. The semiconductor industry is now expected to register a 20 percent increase this year, up five percentage points from the 15 percent growth rate forecast in mid-year. Constraints of passive supply are set to last until Mid-2018 but we’re experiencing lead times of automotive grades devices exceeding 52 weeks.
In an emergency component source situation are brokers contacted to find a component sourcing solution?
We subscribe to the market leading online sourcing database containing access details to over 900 billion components, therefore alleviating the requirement to ever source through an agent. However, owing to the importance of quality and supply chain integrity we only use these options in extreme circumstances and with customer approval.
What advice would the Purchasing Professional team at Esprit give regarding managing Lead Times to our readers?
If we’re to continue to provide the service levels our customers require we have to maintain focus on lead-time trends, worldwide economic influences and product developments. In light of the turbulent lead-time issues, organisations are going to have to continue to work smarter to meet forecasts and expectations.