The supply chain is evolving - and companies need to keep up
The past two years has delivered blow after blow to the electronics manufacturing industry. Disruptions stemming from the pandemic, logistical issues and lockdowns of complete cities. All out together we saw factories all over the world slowing down, sometimes resulting in partial or complete closures.
EMS companies are facing increased pressure to meet unprecedented demands. Customers need lower costs, increased scope of services, and faster turn times – at the same time as lead times a climbing.
Digitalizing certain steps, such as the RFQ and purchasing processes is, according to CalcuQuote, one of the best options available to improve the speed, accuracy, and efficiency of a business. One key element of this is real-time data and API capabilities that connect customers with their supply chain partners.
Without real-time visibility, we don't know for sure
However, one step beyond the digitalization of the supply chain lies AI. Evertiq reached out to Chintan Sutaria, founder and CEO of CalcuQuote, to pic his brain about the future of Supply Chain Management and AI’s place within it.
With the current constraint situation surrounding the semiconductor supply chain – what are the major benefits that you see in opening the door towards AI-based sourcing?
“AI helps solve problems of single-sourced components. Our AI tools more accurately suggest alternate parts. AI can also help reduce the manual work of scrubbing BOMs and making more informed decisions,” Mr. Sutaria explains to Evertiq.
Having talked to many companies over the course of the shortage, several people mention that the personal network and connection have been crucial in finding new venues to secure supply; with an AI-based sourcing solution these connections are somewhat made obsolete – but can an AI truly compete with a personal relationship and willingness to help?
“AI isn't meant to compete with personal relationships. AI helps people to make logical decisions, reducing manual effort so that more FOCUS is placed on personal relationships. We believe that in applying new technology, more time and resources are freed, allowing for increased human investment in functions that only humans can do,” Mr. Sutaria says and continues.
“AI is a powerful tool for improving the accuracy of forecasts and increasing the productivity of the factory.”
How could an AI-based solution assist in making the time-consuming task of finding alternatives for out-of-stock products smoother?
“AI is an excellent resource for manual processes. The human brain is complex, and there are no replacements for personal dialogue and engagement. Let AI handle the simplistic processes, so your team can put their skills to use on more complicated tasks.”
You have previously stated that real-time visibility is key if supply chains are to become more agile and resilient to disruptions. With that in mind, what do you think should be done from the semiconductor manufacturers side of things (besides continuing to increase capacity) to alleviate the situation?
“Knowing about problems sooner is better than finding out about them later. More transparency about capacity will help the rest of the supply chain adapt before the problem gets worse.”
The conversation moves over to something the market tends to see during periods of shortages; a shift in allocation strategies and methods as well as an increase in counterfeit components. But how does this current crisis compares to previous ones? According to Chintan Sutaria the duration of this disruption is greater in terms of breadth, magnitude, and duration.
“As a result, I think we're seeing, more than before, a tendency to go for aftermarket parts, which is encouraging counterfeiters to be bold. Everyone needs to be aware this is happening, and take measures to protect themselves accordingly.”
As Chintan Sutaria stated earlier, real-time visibility is key in order to respond to issues quickly, and additional transparency about capacity can help to create a more stable situation for the industry as a whole. Which is why the company has added to their suite of solutions aiming to further digitalize the supply chain – StockCQ
In a nutshell StockCQ is a digital marketplace for OEM and EMS companies to trade parts and inventory directly with each other.
A collaboration between CalcuQuote and electronics industry association IPC, allowed a rapid, iterative response to the concerns held by electronics manufacturers about the impact of component shortages.
Through a series of roundtable discussions, with more than 75 executives in attendance, consensus was reached that a fair way of sharing inventory directly with each other would help mitigate the impact of the ongoing component shortages, free up working capital and reduce waste – and from that StockCQ has evolved.
CalcuQuote’s says that its research – across millions of searches – shows that cases of sufficient stock responses from the supply chain have dropped more than 20% during the past year. This leads to a significant number of assemblies being stuck without the components they need in order to be completed.
However, findings also show that in 30% of cases where authorised distributors are out of stock, the same component was also identified as excess inventory by another company within the CalcuQuote ecosystem. This overlap between shortages and excess inventory could potentially help alleviate certain supply chain challenges – and also illustrates the importance of transparency about capacity and stock.