IoT, automobile, 5G, create massive demand for electronic parts: What you need to keep up (video)
January 30th, 2019
With innovative technologies rapidly expanding, demand for electronic parts shows no signs of slowing.
We are experiencing unprecedented demand for electronic components, fueled by rapid growth in the automotive and IoT verticals. In contrast to the past decade, the past few years have seen a much more allocated market. We noticed demand began to increase around three to four years ago — and today, it shows no signs of slowing.
MarketWatch forecasts that the global market for connected IoT devices will grow at a compound annual growth rate (CAGR) of around 19% from 2018-2023. Looking ahead, 5G technology stands poised to create further supply chain disruption and demand for electronic parts. Suppliers all over the globe must react to meet these demands. Here are three ways you can prepare.
1. Stay nimble to respond to 5G-fueled growth
The exact timing of 5G to enter the market is still unclear, but it is certainly on the horizon for 2020 or 2021. And the predicted impacts to the global market are significant: A recent report by Market Research Future predicts that the market for 5G technologies will experience a CAGR of 21% over the coming five years, with a market size of $73 million by 2023.
While the implications for this technology in general are staggeringly widespread, let’s focus on the impacts for your supply chain. EPSNews notes that “disruptive technologies like 5G also can magnify typical supply chain concerns.”
5G holds promise for a huge variety of applications, from automotive to augmented reality. New supplier relationships will form and demands will evolve as new components emerge on the market. With all of this change, you will need to stay on top of changes as they are happening. Responding to demands will require a close eye to market trends and ready access to in-demand components.
2. Invest in optimized procurement and logistics
While many specifics about the rollout of 5G remain unknown, the best way to prepare for the future is to hone your systems now. Take the time now to ensure seamless alignment and execution in your procurement and administrative arenas.
With procurement, you can start by identifying cost-reducing opportunities on your bill of materials. An independent distributor can give you access to a vast network of qualified supply channels to deliver cost reductions to OEM, EMS, and distribution providers.
Ensure that you are operating at optimal efficiency by taking a deep dive into your inspections practices and warehousing. Any improvements in your business practices will support long-term performance and set you up for success when the effects of 5G enter the market.
3. Establish relationships with trusted partners
Regardless of your vertical, cultivating trusted supplier relationships is a wise investment. You don’t want to find yourself in the position of scrambling to stay on top of demand. But if you do, you need a trusted partner. Supply chain security is often exploited during times of demand, by market pressures forcing suppliers into difficult positions. That doesn’t have to be you. We find parts that others can’t.
Working across multiple verticals informs Velocity’s unique perspective. We are not a traditional independent distributor. When we see a need in the market, we seek to fill it. Over the years our expertise has grown to include inspections, vendor managed inventory, and supplier consolidation services.
If you are ready to start investing in the logistics that will give you an edge or the partnerships that will keep your business thriving, give us a call today.