Allocation warning brings significant problems for European suppliers

Allocation warning brings significant problems for European suppliers

Business news |
By eeNews Europe

“I reckon there’s about three months inventory in distribution today but the average customer probably only has a few weeks,” said Adam Fletcher, chairman of the global distributor’s association IDEA and of AFDEC in the UK. If you are a sound organization you should move from two to three weeks to perhaps six weeks as that gives you headroom.”
He sees the market picking up in 2014 (see figure above) and this will put pressure on smaller systems integrators. “I think 2014 is going to be quite a good year, but the move from two a week lead time to 16 weeks happens in a week, and a mid range systems integrator in the UK or Germany is really going to struggle to get hold of components,” he said.
This has come from more consistent global reporting, as the global distributor’s association, IDEA, has standardized reporting across all its members to give a more accurate picture of the electronic component market. “One of the things that’s useful over the last 18 months is standardizing the reporting with harmonized definitions,” said Fletcher. “It has taken us five years to do this for China, two years for India, and now we can report across Europe, North America, China and Asia Pacific
The buoyant market means system builders are more vulnerable if there is a problem such as the recent Hynix fire, Japanese earthquake or Thai floods.
“If there’s a problem it’s at least 12 weeks before the problem can be addressed, so if systems integrators are being careful they should be thinking about how to de-risk their supply,” said Fletcher.

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