How Do Terminal Manufacturers Cope With The Shortage Of Components

- Sep 15, 2018-

As the prices of these components continue to rise in 2017, the component business is becoming increasingly competitive.Component distribution industry is also facing unprecedented dilemma, shuffle and transformation is inevitable.The mobile phone market in China has seen a surge in price rises, ranging from a few dozen yuan to a couple of hundred yuan.

Manufacturers' explanations for the price increase are that almost all the upstream raw materials are out of stock, including the main chipsets, display and touch modules, front and rear cameras and storage modules.As mentioned in the previous core headlines, the market was not expected to develop rapidly, market instability and competition.Therefore, many products in the entire industrial chain are out of stock;Many agents and distributors are stocking up to bid up the price of chips.

Why is there a major shortage of mobile-related parts this year?

Actually in the core components in a few years ago are mostly from the United States, Japan, South Korea and Taiwan manufacturers supply, but in recent years, Chinese manufacturers have, in the aspect of mobile phone chips greatly narrowed the gap with foreign enterprises, including huawei haisi, spreadtrum and millet can be independent design chips.

In terms of panels, Chinese manufacturers have overtaken Taiwan in capacity, second only to South Korea.In particular, the display and touch modules, mainland Chinese manufacturers already have their own intellectual property rights, and do not rely on imports.Therefore, the "out of stock" status of these components will not last long.

In addition to the "shortage" of components, the price hike in China's mobile phone market in 2017 is also related to the transformation to the high-end market.Since last year, many domestic phone manufacturers have stepped up their presence in the mid - and high-end markets.

According to industry insiders, platform chips must be out of stock and credit like Banks to control the market.

How do terminal manufacturers cope when components are out of stock?

1. Effectively improve delivery time and stabilize supply

In fact, the problem of shortage has been deeply troubled by the terminal manufacturer. As the distributor who ACTS as a lubricant in the supply chain, it takes advantage of the situation and actively helps the manufacturer to alleviate the shortage.The information can be Shared with upstream suppliers according to the change of market demand to help suppliers improve delivery time and stabilize supply effectively.In fact, we also increase the inventory and stock to support the manufacturer's production demand, and assist the manufacturer to make more accurate production plan and procurement forecast.

Will the customer run over to the competitor because you are out of stock?Well, there's definitely going to be this one, and if you do that you're going to do that.You do a balance in the supply chain, you don't put all your eggs in one basket.

This shortage really affected the shipments of many customers.Even if a customer turns to a competitor, it will take several months and still affect customers' shipments throughout the year.

2. Shortage processing focuses on improving supply chain management ability

As long as the production cycle of electronic components is always more than 4-6 weeks, as long as the economic cycle is fluctuating in the light and peak seasons, the problem of shortage of electronic components in the supply chain is difficult to be completely alleviated.However, if the supply chain management work is done well and the shortage problem is faced seriously, the customer can minimize the trouble caused by the above shortage incentives.

The improvement of supply chain management depends on the joint efforts of suppliers, distributors and manufacturers to create a favorable environment for multiple factors such as sufficient production capacity, smooth upstream and downstream information, proper stocking and accurate production forecast.The key factor for the supply chain shortage to be alleviated is the capacity control of suppliers, which cannot be met in the peripheral market of demand brought by economic recovery and is not cheap.

3. Unimpeded upstream and downstream information is the key factor of goods shortage

The industry also believes that the flow of information upstream and downstream is a key factor in the shortage problem.Whether it is capacity control or customer prediction or production management ability, it is necessary to establish the basis of upstream and downstream information unimpeded.If the information communication between the supplier and the customer is smooth, the customer can take preventive measures in advance, and the supplier can adjust the capacity according to the actual production demand of the customer, so as to match the material demand of the customer to the maximum extent.

In the short supply environment, manufacturers should timely respond to changes in market prices."" if the customer's order price is much lower than the market price, it will greatly increase the instability of the supply chain and the risk of shortages.As we have observed, in the case of severe shortage, the supplier may choose to give up the supply of such customers with severe price pressure first, and would rather release some goods into the market spot circulation area at a high price intentionally or unintentionally.

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Source: NEPCON

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