Viewpoint: How COVID-19 is impacting outsourced contract electronics manufacturing

Author : Steve Marshall | Managing Director | Offshore Electronics

01 March 2021

Steve Marshall, Managing Director at EMS provider, Offshore Electronics
Steve Marshall, Managing Director at EMS provider, Offshore Electronics

Every crisis – large or small – creates both challenges & opportunities. And COVID-19 is no different. It has caused tragedy for families & communities around the world; resulted in political upheaval; and massively disrupted the global economy. The consequences will be with us for a long time. Here, Steve Marshall, Managing Director at EMS provider, Offshore Electronics reviews how it is impacting outsourced contract electronics manufacturing (CEM

The full version of this viewpoint was originally featured in EPDT's H1 2021 Electronics Outsourcing supplement, included in the March 2021 issue of EPDT magazine [read the digital issue]. Sign up to receive your own copy each month.

As we learn to live with COVID-19, we’re starting to see the emergence of new ways in which we live and work. At Offshore Electronics, in common with most manufacturing businesses, we’ve implemented rigorous procedures to protect our staff, adapted our production processes to reflect the changing needs of customers and suppliers, and increased our investment in new automation and production technologies.  

But COVID-19 has not only brought about short-term change. It has also accelerated the rate at which underlying trends – many that have been with us for a while – are happening.

Trends in contract electronics manufacturing
As an example, we have seen a significant increase in customers that want to reduce their stockholding. This is an understandable desire: large volumes of electronic boards and electro-mechanical assemblies held in stock ready for final production can tie-up considerable levels of capital.

The challenge, of course, is that customers that want to minimise their stockholding simply move the problem back down the supply chain. Ultimately, somebody has to pay. Associated with the issue of stockholding are the twin demands for ever-shorter lead-times and the need for smaller volumes of customised or partially-customised electronic parts and assemblies.

As a leading CEM, we sit in the middle of the supply chain. This puts us in a position where we understand the challenges faced upstream by our customers and downstream by our suppliers. We recognise that many of our immediate customers, especially specialised OEMs (original equipment manufacturers), are under similar pressures from their customers further up the chain, while component suppliers need to be able to predict levels of longer-term demand to be able to source materials and plan future investment...

Read the full article in EPDT's March 2021 issue...

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