Real-time inventory stabilizes up & down of semi supply
By Jens Gamperl, CEO, SourceabilitySemiconductors Supply Chain distribution editor's pick semiconductor Sourceability supply Chain
Too few. Now, too many.
Analysts don’t expect the current surplus in semiconductors to stabilize until the fall. After the shortage that persisted from 2020 until recently, some may believe that a surplus is a positive. In fact, this mismatch of supply and demand is pressuring companies to offload their stock before the semiconductors surpass their efficacy expiration date.
As was demonstrated during the pandemic and various lockdown periods, the semiconductor supply chain is volatile and prone to disruption. On top of that, chips take months to manufacture and their delivery timelines are stretching longer and longer, sometimes up to 64 weeks.
To prevent an organization from being flat-footed in the swift rush for electronic components, real-time visibility into inventory availability is critical for manufacturers to maintain a ready-stance. Even when the semiconductor market and supply chain eventually stabilize, manufacturers must be proactive to avoid bottlenecks and streamline their operations.
How does real-time inventory work
Because the semiconductor manufacturing industry is heavily centralized in Taiwan, South Korea, Japan and China, the tiniest political, meteorological or supply chain ripples in the region could set off a far-reaching tidal wave of disruption to the entire world’s timely access to semiconductors.
Real-time data pairs a high volume of historical, high-quality data with an analysis of current market availability to notify electronic parts buyers on the best times to buy. The “best times” varies depending on current and forecasted conditions. For instance, was there a slight fluctuation in the market that will trigger a spike in prices? That makes right now the “best time” to buy. Or are current inventory levels dwindling, indicating a potential electronic part scarcity? Again, buy now before it’s too late.
OEM & semi market health depends on real-time data
The U.S. CHIPS and Science Act will likely take years to make a dent in the semiconductor supply. In the meantime, the United States, Canada, Mexico and other regions will have to navigate the volatile current market. To optimize operations, avoid panic buying and get the most value for every dollar, real-time inventory opens a valuable window into supply chain dynamics.
The overall market also benefits when electronic parts purchasers leverage technology to make data-informed, strategic purchasing decisions. The fewer manufacturers that overbuy and stockpile, the more high-quality parts will remain for equal distribution. Swift decision-making is also crucial to a healthy market. One study shows that hesitancy and poor trend predictions are somewhat to blame for the extreme shortage in 2020.
Resilience is key to smooth manufacturing operations
Electronics parts buyers must work flexibility into their buying decisions. For instance, relying on a single seller can lead to major bottlenecks or even halts in production. If a seller goes out of business or it discontinues a component that’s central to their product, it leaves parts buyers scrambling for alternate solutions. In their panic, they could possibly fall into the trap of a counterfeit parts seller. Real-time data can identify alternate electronic parts sellers and indicate their inventory levels. It’s best practice to diversify vendors to avoid over-reliance and rigidity.
While reselling overstock isn’t advisable as a front-running strategy, it’s a viable backup plan to ensure that an organization doesn’t take a loss. Data can reveal who may be in the market for resold, high-quality items.
Take back purchasing power
Real-time data gives manufacturing leaders a more active role in their purchasing decisions. Instead of tackling each new day blindly, buyers have the power to take ownership of their next move thanks to trustworthy insights.
Big data analytics in the semiconductor and electronics market is expected to skyrocket to USD 50.88 billion by 2030. This more than doubling in value from 2022’s valuation (USD 22.8 billion) shows that a company’s competitors are likely to jump on data analytics soon if they haven’t already, giving them a major advantage over those who do not leverage the technology. With the current semiconductor supply and demand imbalance and proven volatility, now is the time to invest in the tools that’ll help a manufacturing operation stay on track.