Consumers: The Forgotten Factor of the Electronic Component Shortage

When analyzing the current electronic component shortage, it’s easy to narrow the discussion based in terms of dollars and cents, profits lost versus profits gained, industry growth versus stagnation, etc. It’s an echo chamber of our own making, built based on the data and conclusions that most greatly impact our business. Industry experts are excited for the implementation of 5G, for example, yet remain concerned about how supplier capacity will be further strained when current component manufacturers and distributors are already struggling to meet OEM demand – especially in automotive and IoT markets.

What can get lost in these discussions, however, is that these nuanced discussions can sometimes lose sight of the very real impact these shortages have to what is universally considered the most important factor in any equation related to the manufacturer: the consumer.

Consumer demand is at the heart of any manufacturing decision related to an electronic product. A design change could leverage newer technology to reduce costs, improve ease-of-use, or generally improve quality of life. Effects will vary depending on the product and industry, but to be successful in a competitive marketplace, virtually every meaningful change must result in a net positive for the consumer. The introduction of a new smartphone may not necessarily result in reduced costs for example, but the combined benefits of improved efficiency, longer battery life, and faster connection speeds significantly outweigh the drawbacks. Even on a macro-level where OEMs are sourcing components such as MLCCs at previously unheard-of rates, consumers pay a vital part of the equation; after all, OEMs would have little desire to accept additional supply chain risk if it wasn’t what consumers demanded of them.

But just as both parties benefit when an OEM matches consumer demand as the result of supply chain disruption, they also feel the consequences of when such demand cannot be met as a result of component obsolescence, allocation, or other disruption related to the electronic component shortage. These effects go far beyond a consumer’s ability to purchase the camera, smartphone, or other electronic device they want. In certain markets, the inability of an OEM to adequately support their consumer base has very real consequences.

Arguably the most visible example of this can be found in the healthcare industry. Healthcare OEMs, already pressured by extended product lifecycles and long-term service agreements, do not have the luxury of being a primary market driver for the critical electronic components they require. If they cannot adhere to those agreements and match the needs of healthcare providers, then inevitably the quality of care they can offer their patients will decline.

When the trend of OEMs providing more self-care products for patients who desire greater control of their healthcare is factored into the equation, the consequences are even more dire. If an OEM commits to manufacturing handheld devices to measure insulin levels, for example, any inability to do so puts added strain on thousands of type 1 diabetes patients who depend on such products being widely available.

Implementing and maintaining a thorough inventory management strategy that includes protection from obsolescence and allocation should not be considered simply in terms of the OEM or supplier; it’s a choice that must be made for the benefit of the customers OEMs depend on. Businesses for centuries have relied upon the old adage “put the customer first” to lead their decision-making, and decisions related to mitigating supply chain disruption should not be any different.

Consumers are the lifeblood of our industry, regardless of where we fall upon the supply chain. If we remember that, and adhere to proven strategies that follow through on our shared desire to serve those whom we owe everything to, we will all be better for it.

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