Addressing the Electronic Component Shortage in the Automotive Electronics Industry

Today, the rapid growth of emerging technologies, digitisation of industries and the proliferation of electronic devices have resulted in a significant demand for electronic components. As demand supersedes supply, the world is seeing a shortage of electronic components, causing widespread disruptions in different industries, especially in automotive electronics. According to Statista, the Value Added in Electronic Products & Components market is projected to amount to US$30.82bn in 2023, while an annual growth rate of 1.41% is expected (CAGR 2023-2028). Here are four key strategies that can be leveraged to deal with the shortage:

1. Improve Forecasting

Without a doubt, accurate forecasting can help automotive companies anticipate potential supply chain disruptions, and this is where electronic component suppliers come in. Experienced suppliers such as ourselves can forecast future demand for the components, enabling the planning of production and procurement activities accordingly for a better-managed supply chain. With established partnerships and global networking, suppliers can also gain market insights and develop market intelligence reports. Ultimately, this allows them to provide valuable advice and recommendations to clients, easing any decision-making processes.

2. Diversify Supply Chains

Overreliance on a single source or region for semiconductor chips is never a good idea when there is electronic component shortage. Therefore, electronic component sourcing is important. Automotive electronics companies should diversify their supply chains to combat this problem. Sourcing chips from a number of suppliers and geographically diverse regions allows manufacturers to minimise risk of disruptions caused by localised events.

3. Prioritise Product Lines

Automotive electronics companies should focus their product lines based on factors such as profitability, market potential, and customer demand, as the availability of electronic components is limited. Conducting a careful analysis of financial considerations, market trends, customer preferences and other significant factors is a must to ensure more informed decisions.

4. Collaborate with Partners

Tackling the chip shortage effectively also depends on collaboration among automotive electronics manufacturers, electronic component suppliers and other industry stakeholders. Strong partnerships allow companies to pool resources, look for innovative solutions and share expertise to diminish the impact of the shortage. Proactive communication between manufacturers and suppliers empower greater insights into chip availability, potential constraints, and lead times. As part of cooperative efforts, partners can perform joint forecasting and planning, apart from evaluating sourcing options and sharing demand information. At Briocean, our source experts will collaborate with you to gain a comprehensive assessment of your surplus inventory’s resale potential.

While the electronic component shortage has posed consequential impacts on the automotive electronics industry, strategic measures are in place to prevent the negative impacts from escalating.

Briocean is one of the leading independent electronic component distributors, catering to diverse industries. Founded in 2008, our expertise in automotives is unparalleled with our primary clients in this industry. We keep ourselves relevant and address our customers’ needs by staying on top of market news and trends to provide component sourcing solutions through different market conditions.

Contact us now if you are in need of a reliable electronic component distributor.