Challenges of Electronics and Storage Manufacturing

Electronics and storage device manufacturers face ongoing operational and supply chain challenges due to internal disruptions, geopolitical events, and socioeconomic issues each day. Below are several key challenges that have significantly impacted their supply chains. Disruptions appear to be the biggest culprit, as events both within and outside the organization can wreak havoc on the supply chain.

Supply chain planning solutions can help, but unless they model the entire supply chain accurately and maintain an up-to-date model of operations, they are not very useful. Most systems, including spreadsheet planning, fall into this category. They operate on a simplified, high-level view of the supply chain, often ignoring real-world constraints and lacking the comprehensive data (such as a digital twin) needed to make optimal decisions. As a result, users spend days conducting a handful of scenario analyses to find a solution. But “a solution” is by no means the best or even optimal solution.

Let’s look at some common issues that some of our clients have experienced, and have been able to respond to very quickly and efficiently.

• Fluctuations in demand for semiconductor parts and pricing thereof have been a major factor in meeting demand and/or having the right mix of inventory
• Factory and supplier disruptions domestically or overseas, whether caused by an oil spill, contamination, extreme weather such as flooding, or even earthquakes, are increasingly common and must be anticipated in planning processes with agile response mechanisms
• Tariffs are now a fact of life. But what makes it harder is the fact that companies have no idea how long it will last, or whether it will go up or down, and when. Planning systems can assist in supplier shifts and reconfiguration of assemblies; however, they must also evaluate the effort and future tariff exposure of alternative locations.
• Business decisions and competitive pressures may require changes in the operations and diversification. Many companies are in the process of doing this. However, this will not necessarily mitigate the risks in the supply chain. In some cases, it may even increase it because of the lower volume and changes in the mix of products offered or a reduced number of suppliers.
• Inventory imbalance due to geopolitical events that impact global operations. Examples are tariffs, pandemics, earthquakes, wildfires, etc.
• Rising freight costs and shipping delays have added to supply chain inefficiencies. Incidents like the Suez Canal blockage or attacks on major shipping routes have contributed to this challenge

Potential Strategies for Improvement

There are several ways that supply chain risks can be mitigated. Examples are reducing reliance on specific regions for critical components, near-shoring, vertical integration, and so forth. However, all the above require a long-term strategy and do not necessarily protect against the kind of disruptive events stated above that are now the norm rather than the exception.

One high-impact improvement that can be implemented quickly is building a digital twin of the supply chain. This strategy enables an understanding of the impact of each event in real time; moreover, the system offers recommendations on what options are available. This significantly reduces decision latency, a major issue for companies constantly faced with disruptions. A true digital twin of the environment provides a clear understanding of operational realities. Additionally, smart algorithms are essential for making decisions based on the current state of the supply chain. These algorithms analyze millions of scenarios and provide options to end users along with analytics and financial data to support their recommendations. Such capability can be tremendously valuable for ensuring timely delivery and minimizing operational costs, given today’s supply chain challenges and the complexity of current supply chains.