Judging by the headlines, the electronics supply chain would be hard-pressed to point to any bright spots on the short-term horizon.
Today in the US, President Obama's ambitious jobs bill was rejected by the Senate, and Europe continues to debate the bail out of some of its member nations. On the other side of the world, China is seeking to lower the yuan, and Thailand is experiencing devastating floods. And that's just the macroeconomic picture: within the electronics industry, the supply chain seems to be on the brink of too much product and too little demand. (See: Supply Chain Turmoil Looms
While there is clearly reason for concern, supply chain executives point out that electronics is a global industry, and there are regions and markets that continue to grow. "Forecasts have not come down as much as people think," said Lindsley Ruth, executive vice president for distributor Future Electronics , in a live chat with EBN readers today. "Business is somewhat down to flat right now." Geographically, Brazil is a bright spot, and Russia continues to make progress. Solid-state lighting -- a market that's relatively new to the electronics supply chain -- continues to evolve, and demand is strong, Ruth said.
Inventory in the channel is high, Ruth says, because demand dropped off without a corresponding slowdown in supply. Component manufacturers have begun to pull back, although no one can say for sure when an inventory "correction" will happen. In the meantime, customers can take a number of steps to lessen the impact of a slowdown.
"I think the best message is for customers to continue to manage their procurement processes as they have been managing them up until now," Ruth says. "Continuity of supply is critical. Although excess is being built today, we still see pockets of shortages. As we write, there is concern over the floods in Thailand and the impact to the supply chain. If the worst case scenario presents itself, then it will be a great buying market... but why risk waiting if you need parts now. So, please keep the flow of what you need coming in today."
Ruth is one of a number of people who believe the supply chain, overall, is better shape than in the past to weather a downturn. (See: Why the Supply Chain Is Stronger.) "The industry is much more mature today versus 10 years ago, and component manufacturers do a much better job at slowing down production," Ruth said. The key, he says, is better and more frequent communication among all partners in the supply chain.