Why a Domestic Manufacturer Helps During a Component Shortage
A manufacturing partner close to home offered OEMs easier communication, closer relationships, shorter shipping and less exposure to political and economic shifts while parts stayed short.
The electronic component shortage carried on into 2018, and it was getting harder to work around, let alone stay ahead of.
Demand for new consumer devices drove the shortage, and worry about low inventory added to it. As early as October 2017, EE Times reported that allocation and double ordering had become more frequent concerns for buyers. Every extra order placed to protect a build drew supply down further.
The component shortage, along with changing economic and political conditions, made a case for keeping your manufacturer close to home.
1. Convenience and Communication
A domestic manufacturer works in the same or nearby time zones as your team, so you can reach the people building your product at short notice. Fewer language barriers make each conversation simpler too.
2. Building a Relationship or Using an Existing One
Good working relationships with your contract manufacturer always matter, and they are easier to build when the manufacturer is closer to you. A domestic manufacturer may also give you access to its existing relationships with vendors and suppliers.
If you do not yet work with a domestic manufacturer, build that relationship now, even during the shortage. Every company should have a backup plan in case its current manufacturer cannot meet its needs in the future.
3. Shipping Costs and Time
With components short, prices rise along with demand. Working with a manufacturer overseas adds shipping costs on top of those higher prices, and the time product spends in transit has a cost of its own.
Consider how many sales a long wait could cost you if your parts or products are slow to arrive. Working with a manufacturer in the United States shortens the distance between the build and your customers.
4. Political and Economic Uncertainty
Shifts in political and economic conditions could worsen the shortage, now or later, by affecting both access to parts and their price.
A manufacturer in another country brings that country’s economic and political uncertainty with it. A shift in currency exchange rates, the cost of oil, or a recession could trigger price increases and further delays for your parts and products.
Lead times for many parts were still long in mid-2018, so tight supply looked set to continue. Watch demand in your market, line up alternate parts and a second distributor, and bring a domestic manufacturer into your planning early.
Kodiak Assembly Solutions builds in Austin, Texas, with sourcing, assembly and testing in house.