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US Supply Chain Is World’s Most Vulnerable: Challenges and Opportunities

Recent data released by Statista Supply Chain Index indicates the US manufacturing supply chain is most at risk to supply chain disruptions. Over the last few years, there has been an immense paradigm shift caused by the pandemic and related issues, catching many businesses off guard as sourcing moved swiftly away from old protectionist measures and toward a new model relying on supply chain agility and speed. Key industries relying on electronics manufacturing ramped up demand so quickly that inventories of necessary components like semiconductors have dropped from a 40-day supply down to 5 days, leaving many scrambling to find new and faster ways to increase supply.

What challenges should you be aware of right now that may affect your own electronics supply chain, and what strategies should you consider to further cut risk? Here are some suggestions.

Rising Shipping Costs, Longer Lead Times

Rising Shipping Costs, Longer Lead Times

Challenge:

Skyrocketing freight costs from Asian locations created issues for American manufacturers. So too have costs associated with longer lead times caused by port delays on both sides of the Pacific. Shipments often wait for space within cargo holds only to wait again upon arrival off the US coast for a place in port. At the beginning of 2022, delivery time from Asian sources stretched to a record high of 113 days.

Opportunity:

Forward-thinking companies within the electronics industry are now exploring reshoring options to minimize shipping costs and risks. While removing complicated manufacturing jobs from a long-standing Asian partnership can take months, other SKUs relocate faster and with less difficulty. Working with a cloud manufacturing service can expedite the process by providing access to excess factory capacity across your new partner’s network.

Maintaining Safe Vendor Relationships

Challenge: 

Today’s component market is one of the most constricted and challenging in recent years.  Available electronics components can be gone in hours if not minutes, fueling panic-buying as some fear losing an opportunity.  

It takes experience, caution, and resourcefulness to build a bullet-proof supply chain.  But as the electronics inventory network constricts, more companies move beyond approved vendor lists to source from non-authorized and unknown brokers.  Many of these companies work within a gray market that remains the primary source of counterfeit components. Gray-market parts increase the chance of component failure and escalate cybersecurity risks.  

Opportunity

Working with a cloud manufacturer like MacroFab can expand your electronics supply chain safely.  Our internal team has built deeper and wider sourcing opportunities than most companies can manage, and can shape your BOM from that secure and vetted supplier list.  Additionally, before working with new vendors, we exercise extreme preventative maintenance by checking ERAI resources for possible bad actors related to the company.  Recently we revealed and blacklisted a proposed supplier that had 25 alias entities and fifteen previous wire fraud alerts connected to it, keeping our customers safeguarded from this potential risk. 

Retaining and Retraining Workforce

robotics

Challenge:

In recent years, supply chains have embraced newer technologies like automation, robotics, and blockchain. Now, shipping resiliency is inextricably linked with manufacturing productivity and technology investment. While the US has invested in industrial robotics, AI, and other Industry 4.0 technologies, workforce training hasn’t kept pace with the demand. Finding enough skilled workers to fill open positions remains a challenge here and across the world.

Opportunity:

As countries invest in technology and additional education programs, local companies will enjoy a ready supply of reliable, local labor. This will drive regional economic growth and prove a win for manufacturers through lowered costs, improved outputs, and shorter supply chains that expedite deliveries.

But working with existing North American contract manufacturers with in-place robust teams can provide the same benefits now. Look for a cloud manufacturing service network to provide diversification and reduce risk further.

Balancing Tech Needs With Cash Flow

  CHECKPOINT

Lost opportunity has a cost too. Consider how to accomplish goals with less risk through symbiotic partnerships.
handshake

Challenge:

Supply chain restructuring and technology adoption comes at an economic cost. To successfully achieve any of these goals, companies must have access to readily available cash flow. But in unstable economic times like we’ve seen the last few years the risk-averse or cash-strapped may feel such measures remain outside their reach.

Opportunity:

However, lost opportunities have a cost, too, sometimes far greater than the cost of action. Rather than looking at the situation as all-or-nothing, consider what can be done at this time. Opportunities through symbiotic partnerships can achieve goals for less monetary output. As an example, cloud manufacturing service companies can help with reshoring efforts and risk reduction through manufacturing diversification, typically for equal or lower end costs than current Asian options.

We remain far from solving existing supply chain issues. The current hurdles are not going away. But failure to respond will do nothing to reduce risk. Consider how diversification and shortening your supply chain can impact your company’s future, especially as disruption continues through this year or longer.

Build A Responsive, Flexible, & Resilient Supply Chain That Actually Works