Fingers crossed and touch wood that the worst of the healthcare side of the pandemic is now behind us. As we all learn to live with, get vaccinated, and manage our way on the road map to normality (new variant depending) it begs the question as to will there be any further knock on effects or implications for industry? And unfortunately the answer to that is a big fat YES!
Most manufacturing businesses use a global supply chain and operate on a lean or Just-In-Time (JIT) basis. Components arrive to production for when they are needed. This all works fine when the system is flowing, but like a motorway if there is a crash then everything backs up. This is exactly what has happened!
During the first wave of the pandemic a lot of businesses battened down the hatches and reduced inventory. This has thrown the supply chain and shipping industry out of synch as empty containers sit in the wrong locations and air freight is running at a fraction of normal. A container that used to cost around $1,000 USD to ship is now nearer to $10,000 USD. This means that raw material and component prices are rapidly rising.
Then couple demand that is vastly outstripping supply. During lockdowns there has been a massive increase in spend on laptops, TVs, consoles and mobile devices. Most of the world’s wafer fabs that make chipsets focussed solely on these product lines. Now industry has geared back up there is a massive shortage of chips for anything else. Mini, Honda, Jaguar Land Rover (and soon to be Ford) are all having to pause production in UK plants due to chipset shortages (an average van uses 240x chipsets). The president of IBM Jim Whitehurst recently told the BBC it could be “a few years” before the situation improves.
The same effects are now being felt in the test equipment market. Manufacturers are having to cope with a huge surge in demand and in turn they physically can’t source enough chipsets or components quick enough (or at a reasonable price) to build the testers. A perfect storm!
The upshot is the days of on-demand ordering and delivery are having to be paused. Consumers need to plan well ahead. Both Megger and Fluke are reporting large order books and backlogs on multifunction testers with lead times steadily increasing (10-12 weeks at the time of writing).
To maintain fairness, most distributors are dispatching products to customers in order of date received. When product batches do come in few will make it out to general sale by the time the back orders are fulfilled.
Another frustrating thing is that manufacturers are more often unable to give out an indication on scheduled dispatch dates because they simply don’t know themselves!
So what does this mean for consumers?
- Patience – unless an item is indicated to be in stock, expect to wait a number of weeks before delivery and be prepared to factor for possible further delays or push-backs.
- Price increases – we have already been notified by at least half a dozen brands that they will be raising their prices at the end of June.
- Alternatives – if you really can’t wait, then work with what is available. There is usually a similar item from another brand. So speak to us if you need help or advice in locating one (for example, at the time of writing both Martindale Electric and Metrel are reporting good availability on their MFTs). Maybe consider equipment hire/rental to tide you over while you await delivery of your ordered item(s) that have long lead times?
The human race has thrived successfully for thousands of years thanks to our ability to evolve and change. As businesses, we all need to adopt the same modus operandi with our purchasing for the foreseeable as things will probably take a few more twists and turns before balancing out. It would appear the knock on effects from the pandemic are to remain with us and to be felt for a long while yet.