As 2020 draws to a close, the big markets for electronic components seem to be recovering. Automotive electronics is now at about 90% of pre-lockdown levels, 5G is ramping up and medical / healthcare related markets as you would expect are growing strongly. The new X-Box (Series X) and the Playstation 5 are also imminent and are soaking up manufacturing capacity and inventory now. At the same time, customers who have taken the cautious view and used up their inventory over the year are now being forced to replenish.
Add all this up and it’s no surprise that lead times are lengthening and the market is firming up. Fabs are filling up rapidly and forecasters are predicting 11% growth or more in 2021 – admittedly from a very low base in 2020. Next year could in fact end up being an extremely good year. The ‘a’ word, allocation, is being whispered around the industry again.
As always, the way to avoid being caught out is to share information down the supply chain so that you always have the supplies you need to sustain your production. At Anglia, we seek customer relationships close enough so that we understand the demand patterns and drivers for your business. We are similarly close enough to our suppliers to appreciate how their business works, so that we can act before issues develop. Equipped with that understanding, we can set up a sustainable, balanced level of inventory, and hold it at a short, overland journey from you eliminating the inherently higher risks and costs of airfreight.
Anglia does hold high levels of stock in the UK which puts us in a good position to support our regular customers. In a market like the one that is emerging at the moment, we often get asked to ‘name our price’ by Asian brokers – but we never do, preferring to sustain our long term relationships. Whilst holding high levels of inventory helps us support our customers as lead-times lengthen, we are only as good as the information we’re given. It is well worth creating a well-balanced forecast of your likely demand in 2021, and placing orders against it certainly for Q1 to ensure that supply meets anticipated demand.