Current Global State of Electrical Components Supply Chain
The electrical component supply chain is a complex network of suppliers and manufacturers that work together to provide the electrical components necessary for producing electrical goods. The global state of the electrical component supply chain has been in a state of flux for the past few years due to the disruption from the COVID-19 pandemic and trade embargos.
Raw material shortages, order backlogs, overwhelmed shipping channels, and labor shortages have all been significant problems for electrical component suppliers in recent months. These problems have led to electrical component price increases of 20% or more, in some cases drastically more, and wait times for products never before seen in the industry. Virtually every product type is affected, some more so than others, whether it be circuit breakers, motor controls, PLCs, VFDs, transformers, disconnects, switches, pushbuttons, you name it, the lead time will be long. And the supply chain is expected to remain under pressure.
The good news is that there are steps that companies can take to mitigate the risks associated with electrical component supply chain disruptions. Diversifying the supplier base, developing in-house manufacturing capabilities, and maintaining inventory levels are all strategies that can help companies weather the current electrical component supply chain storm. Keep reading to learn how Bay Power can help you keep a full supply of electrical components on hand, no matter the electrical component supply chain's state.
What is the electrical component supply chain?
The electrical component supply chain is the network of suppliers and manufacturers that work together to provide the electrical components necessary for producing electrical goods. The electrical component supply chain includes:
- Raw material suppliers
- Component manufacturers
Of course, other manufacturers are often involved in the electrical component supply chain as well. For example, companies that make machines that assemble electrical components or the software that helps manage electrical component inventory levels.
If any of these steps in the chain slows down, stops, etc., it will affect every level below it in the chain, leading to supply issues.
The global state of the electrical component supply chain
The global electrical component supply chain has been under immense pressure since 2020 due to the COVID-19 pandemic and trade embargos. Labor shortages, raw material shortages, order backlogs, and overwhelmed couriers have contributed to the issue. Issues earlier in the supply chain (for example, mining labor shortages) ripple down and affect every other aspect of the electrical component supply chain below it.
These disruptions have led to electrical component shortages and outrageous price increases. The electrical component supply chain is expected to remain under pressure for the foreseeable future due to the global nature of the manufacturing process for most electrical apparatus solutions on the market.
How to mitigate the risks associated with electrical component supply chain disruptions
There are several steps that companies can take to minimize the risks associated with electrical component supply chain disruptions:
Plan Ahead and Place Orders as Early as Possible
The sooner you can get your orders placed, the better off you'll be. Get in touch with your suppliers as early on in the process as you can and give them an opportunity to talk with their supplier network to determine lead times. Be open to the idea using different manufacturers for certain components when possible, if the project allows for it.
Diversify your supplier base
Don't put all your eggs in one basket. Having multiple suppliers for certain electrical components reduces the risk of being affected by a single supplier's disruption. Talk to your suppliers and find out which product lines they are having the most trouble sourcing and seek out alternative distributors for those lines.
Develop in-house manufacturing capabilities
In-house manufacturing gives you more control over your electrical component supply and can help weather disruptions. However, many businesses do not have the equipment or expertise to make this a viable option. Bay Power has expanded its manufacturing capabilities for this very reason.
Maintain inventory levels
Having a buffer of electrical components on hand can help you keep production going during a supply chain disruption. With that said, too many businesses ordering a surplus of inventory can put additional stress on the supply chain.
Don't rely on cheap counterfeit components
Cheap counterfeit electrical components are more likely to fail and cause disruptions and outages. In addition, counterfeit electrical components can lead to safety issues. This can also lead to you losing good customers forever. If you need to reduce costs, consider buying reconditioned components instead of taking the risk of buying counterfeits. Bay Power specializes in refurbishing certain used components to function like new. That can be vital when the new component isn't available, or the lead times are simply too long.
Bay Power's solutions for mitigating risk in the electrical component supply chain
Bay Power can help you with various strategies to maintain adequate levels of electrical supplies for your business. We are an electrical component supplier with a massive inventory and an extensive network of suppliers. Our problem solving product experts can help you find the electrical components you need, no matter what the state of the electrical component supply chain is. If the part isn’t available, we can work with you to find suitable alternatives for your project. Contact us today to learn more.