In the electronic component space, the balance between supply and demand can become tedious since both rely so heavily on the health of the entire supply chain. The challenge to find equilibrium has become especially prevalent in recent years amid the pandemic and the affect it has had on manufacturing, pricing, availability and lead times.
Fusion Worldwide President Tobey Gonnerman appeared as a guest on an episode of SupplyChain Talk – a talk show featuring industry experts who discuss the latest supply chain news. The topic of discussion included ways to reduce the impact of commodity shortages, advice for improving long-term planning and how to work with suppliers to navigate rising commodity prices.
In a question about mitigating inflation in the current market, Gonnerman states, “It’s not often that it’s a sellers’ market or a manufacturer’s market … We’ve seen manufacturers and suppliers emboldened by this shortage because of the demand, and they’re not always in a power position in the negotiation.” This has been reflected in component pricing across the board as higher prices seem to be the new normal of late.
Gonnerman emphasizes, “the lessons learned during shortages need to be applied during normal times... when the dust settles on the shortage, they [suppliers] should re-calculate their supply chain strategy to focus more on supply assurance through any market.”
A stronger strategy can mean a different way to collect and view market intelligence. Gonnerman comments on the “inherent flaws that exist in a lot of the forecasting that’s put together by manufacturers,” which “just looks at raw data, past usage and set data from the past.” However, forecasting based on data from previous years doesn’t adapt to what the future landscape might look like.
In turn, he then explains that Fusion Worldwide has applied a different strategy for providing customers with market intelligence by tapping into its vast network. “A big part of our business is that one manufacturer’s problem might be another manufacturer’s opportunity. So, matching up and finding the correct home where the parts fit in and sharing information from one large company to another company is a huge value add,” comments Gonnerman.