With M&A activity rising this quarter, on top of an already active first half of the year (1H10), the spending spree continues, especially for the semiconductor industry's larger companies. From numerous high CAPEX spends to major M&A, cash reserves are being used to capitalize on market positions now that long-term economic forecasts have greater visibility (continued growth through 2014 but with normalizing levels commencing 2H10), and opportunities are still ripe.
Regardless of the sector you operate in, chances are your supply chain is being or is about to be affected. The M&A strategies are designed to diversify markets, move into new growth areas (e.g., medical, tablets, energy), and to continue localization efforts (i.e., moving manufacturing closer to end-markets – particularly in SE Asia as emerging economies are the new growth consumers) for the acquiring companies (cf. this recent Commentary post, and the upcoming issue of MarketWatch Quarterly). However, the ramificataions of the M&A is that suppliers may suddenly disappear and/or be unable to source the components you need.
The important questions to ask are: "What is the status of my BOM? EOL sourcing? And supplier continuity?"
It's time to make sure your strategic efforts are not dropped as supply chains shift rapidly AND during a time of what we all see as an extended shortage period. Having suppliers with quality assurance and impeccable track records, deep product knowledge, and agile component logistics is more critical than ever.
Smith & Associates has a range of immediate and long-term strategies dedicated to the electronics supply chain. Smith's dedicated teams can provide the following strategic support:
- Reduce the total cost of inventory ownership
- Manage component lifecycles
- Source hard to find parts
- Identify cost-saving opportunistic purchases
- Consolidate and reduce vendors
- Hub components for JIT production or repair
- Disposition slow moving or excess inventory
During volatile market conditions (historic leadtimes, significant key component shortages, heavy M&A activity), it is more important than ever that you re-examine your component strategies. Ensure that you have the necessary supply chain support to protect your business processes so that the M&A butterfly flapping its wings does not turn into a logistical tsunami.