Despite the challenges facing the market, there are huge opportunities behind it.
After the chip shortage in 2021-2022, the market demand has fallen into a sustained downturn. Many products have been on the shelves for months without end users or channel partners coming up with a solution. Existing shelf inventory for some products is being depleted, but replenishment inventory is starting to build up due to slowing demand. Due to the decrease in terminal demand, some of the newly delivered products have excess inventory. As a result, the electronic components market has entered an “era of surplus”.
On November 6, at the 2024 Global Distribution and Supply Chain Leadership Summit held concurrently with the IIC Shenzhen – 2024 International Integrated Circuit Exhibition and Symposium, Mr. Mark Bollinger, Chief Globalization Officer of Smith, and Mr. Rocky Xu, Vice President of Global Procurement at Smith, jointly delivered a wonderful speech entitled “How to Improve Supply Chain Efficiency in Excess Markets”, providing suggestions for industry players to improve supply chain efficiency.
Mark Bollinger, Chief Globalization Officer, Smith
Trick 1: Track market trends
In a surplus market, distributors need to grasp the economic cycle and adapt to technology trends to achieve market breakthrough.
With its forward-looking strategic vision, Smith has been playing an important role in building an in-house IT team many years ago. By building an online platform, we provide customers with convenient and efficient ordering, demand management and quotation services, while continuously collecting real market data on a daily basis. Not only does this help Smith analyze the entire supply chain and anticipate market trends, but it also provides a valuable reference for customers to gain an edge in a highly competitive market.
At the summit, Rocky showcased Smith’s data platform, which shows inventory cycle trends from 2022 to 2024, predicting possible shifts in the market.
Trick 2: Identify opportunities to reduce the cost of services
In Rocky’s view, a relatively stable supply system can give customers a sense of security, which they can rely on and rely on. And Smith is trying to be that wall that customers can rely on.
Specifically, Smith takes a unique perspective and approach to cost reduction. Unlike traditional cost-cutting measures that other companies may be focusing on, Smith is more focused on exploring areas that have gone underlooked to find new opportunities for cost savings. Such as: the establishment of a stable supply chain system, diversified strategic procurement, the expansion of diversified procurement channels, and so on.
Trick 3: Open up new revenue streams
Smith has opened up a new revenue stream through its Intelligent IT Asset Disposition (ITAD) services. This service is focused on helping customers sell excess inventory, reclaim the value of idle components, and realize a potential return on investment by disposing of “decommissioned” hardware equipment.
Rocky shared that Smith’s initiative not only supports the goal of a circular economy, but also helps reduce e-waste in the supply chain, promoting environmental protection and sustainability. Through these services, Smith provides customers with a solution to effectively manage e-waste, while also creating new revenue streams for the company.
Trick 4: Evaluate supply partners
Smith focuses on working with its suppliers and creates a healthier environment for its suppliers through objective and fair evaluations. According to the introduction, Smith’s evaluation criteria for supply partners involve flexibility, global reach, commitment to quality, financial strength, long-termness, market expertise, etc.
Rocky concludes: “Periods of market overtake are an ideal time for companies to review and optimize their internal processes, evaluate partners, and develop long-term sourcing strategies. Making good use of this period can ensure that you remain competitive in the midst of market volatility to cope with future market changes and challenges. ”
Despite the challenges facing the market, there are huge opportunities behind it. Rocky Xu predicts that the global electronics market will double in size by 2030, providing the industry with huge room for growth. Smith will continue to focus on developments in areas such as AI, new energy, aerospace and IoT to prepare for the future.
