From a distributors point of view – Smith
Understanding current market trends, continuous investments in in-house testing and process automation, as well as strategically placed distribution hubs are key factors for mitigating the effects of the current global semiconductor shortage, according to Smith.
In this article series, Evertiq has reached out to distributors and sourcing specialists of electronic components to see just how the experts are dealing with the current semiconductor shortage and what tools they have in place to cater to the needs of their clients. This time, we’re talking to Cleat Kimbrough, Smith’s President, EMEA.
Since the start of the pandemic, the situation surrounding the supply of components has only gotten worse. How would you describe the past year in terms of operations?
“Much like last year, we still find ourselves in a market with unprecedented demand across a broad range of commodities, which is keeping Smith busier than we’ve ever been. Our technological infrastructure – from strong business-continuity resources to proprietary, internal trading platforms – was a major part of what enabled us to keep moving uninterrupted at the onset of the pandemic and still allows us to best support our customers. Smith will continue to invest in and strengthen these infrastructural underpinnings to keep our capabilities ever-growing and our workforce flexible to meet new norms. If COVID-19 has taught us one thing, it’s that flexibility is a necessity. Like many companies, we had to adapt to doing things remotely and will continue that to a certain degree,” Cleat Kimbrough explains to Evertiq.
Mr. Kimbrough also mentions that many companies have also faced challenges with logistics issues caused by unforeseen supply chain disruptions, which has made logistics costs rise significantly over the past 12 months.
“Smith has strategically located global hubs in Houston, Hong Kong, and Amsterdam to help customers successfully navigate these situations. Additionally, in the past year, in response to the industry’s enormous growth, Smith increased our total workforce by 38 percent, more than doubling our number of new hires over 2020. We also opened a new office in Berlin, Germany, to meet the growing needs of automotive customers, bringing our total number of global locations to 17. Smith also increased the footprints of our Hong Kong sales office and distribution center by 40 percent and 70 percent, respectively,” the president continues.
In the past, during periods of component shortages, we’ve seen an increase in counterfeit components hitting the market. What kinds of measures does Smith have in place to catch these?
“Quality control is at the core of Smith’s business and maintaining a secure supply chain is more important now than ever during this unprecedented global shortage situation. As a first step toward proper counterfeit mitigation, our products go through key quality checkpoints even before they’re sourced with our robust in-house-developed supplier rating system. Smith’s procurement teams support counterfeit mitigation by comprehensively vetting suppliers on the front end before purchasing product. Once the product arrives at our operations facilities, Smith approaches quality assurance proactively, from visual inspection to destructive and nondestructive testing in our certified labs.”
Cleat Kimbrough goes on to explain that in the last year, Smith has invested more than USD 1.1 million in equipment and process automation inside its three distribution centers in Houston, Hong Kong, and Amsterdam.
Which specific product group has been the most affected by the shortage?
“The ongoing shortage situation has had significant impacts on a wide range of semiconductors and other commodities. One of the most strained product groups is integrated circuits (ICs), since nearly every industry requires these parts for their technology-product manufacturing processes. ICs are often one of the most used components in products, so companies tend to need to source large quantities of them at a time. As we move further into 2022, we expect this commodity group to continue experiencing significant shortages as fab development for ICs has not yet led to normality in supply.”
What are your feelings about the current market situation as we enter Q2 of 2022?
“The various global COVID-19 restrictions and regulations in play, where some countries have increased their restrictions and others have loosened theirs, are still causing significant disruptions in supply chain management. We expect this trend to stay in place, at least for the first half of 2022, as much uncertainty still remains around the global pandemic situation. We know with certainty, though, that the demand for semiconductors and other electronic components is rising across nearly every industry, as these parts are vital pieces for production.”
Cleat Kimbrough says that the company emphasises market awareness as it works to assist its customers in an effort to stay vigilant of the many potential curveballs the supply chain might throw at them.
“Our global intelligence team puts significant time and energy into understanding current market trends, and, coupled with Smith’s decades-long relationships, this enables us to plan accordingly and efficiently match buyers and sellers of parts. Smith’s continuously growing market intelligence capabilities and the stability of our trusted global supplier base make us confident that Smith will be able to successfully help our customers keep their supply chains moving in 2022 and beyond,” Mr. Kimbrough says.
What plans does Smith have in store during 2022 to further deal with the problems at hand?
“We plan to keep doing more of what we’ve been successfully doing for 38 years – meeting our customers where they are. We will continue to make investments in our people, processes, and places as we look forward to helping our customers make increasingly informed decisions regarding their long-term electronic-component procurement solutions.”
He continues to state that the company has planned investments including new testing equipment, process-automation improvements, and customer-focused online tools to streamline communication. Smith will also continue to invest in its global workforce and provide ongoing education.
“Most importantly, quality control and counterfeit-risk mitigation will remain top priorities as we help our customers keep their lines running. We are opening a second operational hub in Houston that will provide 30,000 square feet of flexible space to expand Smith’s capabilities. It will initially be used to process commodities from Smith’s IT asset disposition arm, making room for additional testing equipment at our flagship distribution center. A new, 20,000-square-foot operational hub in Singapore is also slated for later this year. The expansion of our ITAD services in the EMEA region continues. Earlier this year, our Amsterdam operational hub earned certification to the R2 (Responsible Recycling) standard. This certification outlines policies to manage used and end-of-life electronic components, materials, and equipment via strategies such as reuse, energy and material recovery, and disposal.”
Through vendor-managed inventory programs and other hardware hubbing opportunities, Mr. Kimbrough says that Smith can help its customers keep their supply chains active with buffer stock.
“Smith has the in-house capabilities to be a central hubbing location to manage requests from all our customers’ sites. Our teams will continue to explore these procurement opportunities with customers to help them meet their supply chain requirements from beginning to end,” Cleat Kimbrough concludes.