Zachary Feuerstein

January 14, 2023

Navigating the Post-Pandemic Electronics Supply Chain in 2023: Why the Status Quo Won't Cut it

The electronics supply chain is facing a number of challenges in 2023 that are both vast and complex. Even though the pandemic is subsiding, the underlying issues it brought to light within our supply chain are still prevalent. The constant demand for electronic devices, driven by the continued need for remote work, the proliferation of smart devices, connected cars, AI software like Chat-GPT running on GPUs, and the Internet of Things (IoT), has led to a shortage of critical components, particularly semiconductors. This shortage has resulted in delays in production and delivery, causing dissatisfaction among customers and a loss of revenue for manufacturers.

While the largest distributors of electronic components are trying to keep up with the demand, we're still seeing at least one part per project that necessitates the use of brokers and the grey market. Navigating the grey market for materials through phone and email is no longer a feasible solution for managing the supply chain though. By the time an email is sent to five or so brokers, news of a supply problem has spread, and the price has skyrocketed, leaving one with the option of bearing the cost internally or disappointing and often angering customers. Moreover, with a plethora of suppliers, manufacturers, and distributors, it can be challenging to keep track of inventory, pricing, and lead times. This lack of standardization makes it difficult for manufacturers to swiftly respond to changes in demand and supply.

As per McKinsey, the global semiconductor market, which stood at approximately $600 billion in 2021, is predicted to reach $1 trillion by 2030, with an annual increase of 6-8%. This increase in demand puts pressure on electronics manufacturers to seek new sources of supply and invest in new technologies to enhance their operations. However, the semiconductor industry is just one aspect of the electronics supply chain which is much larger. Consequently, EMS companies are facing novel challenges in managing their supply chain, including dealing with the volatility of demand, managing risk, and seeking new sources of supply.

Geopolitical tensions in China, Taiwan, Russia, Ukraine, India, and other regions also augment the need for more transparency in the supply chain. Companies must develop risk mitigation plans that take into account potential disruptions to the supply chain. Reliance on hardware or software built in these locations is no longer feasible or responsible. These plans should include diversifying one’s supplier base, creating contingencies for disruptions, and finding alternate sources for critical components.

One solution for managing an electronics supply chain in the post-pandemic world is the use of electronics supply chain software such as Breadboard. Breadboard is an American-made software that is vital for the reliability, sustainability, and growth of a modern EMS business. With the increasing trend of "Made in America" in the electronics manufacturing industry, it is imperative to have a software solution that is also American-made. The investment of over $280 billion in the CHIPS act is encouraging, but simply relocating manufacturing to America is not sufficient. The software that powers this industry must also be built in America for security, sustainability and reliability.

Breadboard software offers near-instant quote generation, the capability to handle client BOMs from any format, automated personalized communication with suppliers, and more. The platform also integrates and automates the quoting and procurement process with top electronics distributors, enabling users to focus on their core competencies and expanding their business. This modernization of the supply chain sets EMS companies that adopt it apart from the competition.

As an owner or leader of an EMS company, it is critical to acknowledge that the conventional method of running the supply chain is no longer sustainable. Investing in software like Breadboard is a crucial step in ensuring the reliability, sustainability, and growth of your business.

Please reach out to zachary@breadboard.com to see how Breadboard can help your company today.