As 2015 kicks off, electronic component buyers are seeing a fairly stable-to-flat market in terms of pricing and fairly good availability, with the exception of a few specific products/brands. At Richmond, Ontario-based QEL, a manufacturer of toxic and combustible gas detection equipment, Purchasing and Materials Manager Bart Hughes procures mainly passive components, including small surface mount relays, connectors, circuit boards, ribbon cables, and wires.
Hughes, who says QEL is seeing significant sales increases within some of its own product lines, says he has noticed some “slight increases” in component prices—some of which can be attributed to fluctuations in the U.S.-Canadian currency exchange rates.
“We mostly buy in Canadian funds,” he says, noting that in some instances the component prices are retreating. “We like to see that happen, even if it’s just across a few different products.”
Right now, Hughes says he’s seeing longer-than-usual lead times on relays and buzzers from a handful of distributors.
“We’re 16-weeks-plus on some of these items right now,” says Hughes. “Buzzers, for example, used to be a stocked product, and now they’re at 12-plus weeks.”
Those shipment delays have pushed some of QEL’s own product lead times back a month or more on certain items.
“Right now, we’re sitting at least a month behind production-wise, and I still don’t have the parts,” Hughes says.
In assessing the current buying environment, one director of supply chain for a global electronics manufacturing services provider says availability of components is in general “very good,” with the exception of a few specific manufacturers.
“There are some devices (by brand) where we’re seeing long lead times right now,” says the buyer, who typically purchases a mix of active, passive, and electromechanical components that are used to produce the firm’s wide array of products. “But in general we’re seeing good product availability.”
Due to the differentiation in the products his company builds, the director says he doesn’t necessarily experience the same product scarcity that other firms may be seeing right now. Over the last two years, he says certain devices have been harder to come by due to “constriction in capacity” from inventory correction exercises by suppliers. Also affecting product availability are those suppliers that try to realign their bottom-line margins by, for example, “cutting down on low-margin parts,” he explains, “to focus more on higher-margin items.”
On the pricing side, he says that costs remain generally stable for the components he’s buying, although he says he has picked up on some early indicators of change in that realm.
“Some suppliers are starting to look more closely at our consumption data and earlier/older pricing structures,” he notes, “and adjusting their pricing accordingly.”
Going forward, this director says he doesn’t see any increased need for specific components in his company’s future.
“On the electronics side, the mix is about the same. I don’t see anything going out of the ‘normal’ trend anytime soon,” he says, adding that within the electronics component market as a whole, he sees increased competition among the key players as “everyone tries to get a bigger share of the pie.”