Is your electronics supply chain strong enough to withstand a combination of rapidly-escalating tariffs and historically-high component shortages? According to SupplyChainBrain, this “perfect storm” seems increasingly likely. If the storm hits with full force, the consequences may include more than just price hikes and a slowdown in new product development.
Ultimately, original equipment manufacturers (OEMs) may have to redesign their electronic supply chains. Trade negotiators from the United States and China have been meeting in Washington, D.C. this week, but the atmosphere is reportedly as cold as the Polar Vortex. Maybe your assessment of the situation is sunnier (and warmer). Regardless, it’s time to ask yourself some tough questions.
For starters, who pays – and for how long? Will you absorb the increased costs caused by tariffs, or will you pass these costs along to your customers in the form of higher-priced products? As SupplyChainBrain reports, “judging by industry response thus far, it seems likely that the end consumer will pay higher prices for tariff-affected goods.” That may be the case for now, but will your customers begin to look elsewhere?
The second front in your two-part struggle for market share isn’t any easier. Thanks to the automotive industry, demand for electronic components remains high. Meanwhile, production capacity is decreasing. Logically, you’d expect supply to rise and meet demand. Building new plants is expensive, however, and component manufacturers worry that current demand will fade way.
Digital visibility and management platforms can help you to make informed sourcing decisions. It’s also important to partner with an electronic contract manufacturer who is proactive instead of reactive. For example, SHINE works with each of our customers on tariffs. If your project is facing higher tariff-induced costs, we’ll look at equivalent parts from outside the tariff zone.
Would you like to learn more about how SHINE helps OEMs to get the custom cable assemblies, wire harnesses, and electro-mechanical assemblies that they need? Contact us on-line anytime.