Three strategies defense manufacturers should use to cut sourcing lead timesBlog
February 08, 2022
Today’s global semiconductor shortage has stretched procurement lead times to unforeseen lengths.
Delays in procurement lead times include the electronic components critical to military technology: Memory (as much as 22 to 26 weeks), integrated circuits (as much as 32 to 52 weeks), microcontroller units (as much as 42 to 53 weeks) and more are experiencing supply delays upwards of a year – with little to no relief arriving in the near term.
These pressures have deprioritized production of the last-generation parts defense manufacturers need to keep systems in working order. Driven by increasing demand and potential profits, suppliers have turned their attention and industrial power towards newer, modern components – spelling trouble for obsolescence management and other crucial operations. However, military technology groups aren’t without options. Several tactics can bolster designers and manufacturers in the fight against long lead times and in the process actually future-proof their sourcing efforts.
Understand the data
With high levels of outsourcing throughout, supply chains are often difficult to comprehend. But defense manufacturers and other military technology organizations don’t need to crack obscure layers of information to gain useful sourcing insights. They already have all the information they need: Data – everything from order intervals to part demand – can paint a fuller picture of the forces impacting lead times. Equipped with a deeper understanding of the data already at their disposal, those companies can make more informed, wider-reaching decisions that protect them against ongoing shortages.
Invest in inventory
In normal circumstances, companies try to avoid carrying excess stock. Times like these aren’t normal circumstances, however; the risk of running out of an end-of-life component outweighs the inconvenience of storing extras. If an in-demand part comes back into play, defense manufacturers should purchase what they need and then some. Buying heavy and building buffer stock mitigates risk, especially in an environment where more and more resources are being dedicated to adding new fabs – and more and more components fall out of production as a result.
Expand your networks
Working with a single partner fosters understanding – but when shortages strike, that lean network can exacerbate sourcing issues. To insulate themselves against extended lead times and accelerate the completion of time-sensitive projects, defense manufacturers should develop a global web of suppliers, spread across vital countries and regions. Maintaining international relationships also offers greater access to quality components than otherwise possible with a limited network. Trust, however, remains key: Those suppliers must understand local laws and customs and keep military technology companies updated on any surging disruptions. If they don’t, disaster could ensue.
Despite facing supply issues of historic proportions, defense manufacturers can position themselves for present and future success. By leveraging data, expanding inventory, and growing their networks, these companies can trim sourcing lead times, better serving their clients in the long run.
A2 Global Electronics · https://a2globalelectronics.com/