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64 SMT007 MAGAZINE I JANUARY 2019 Feature by Jamey Mann KIMBALL ELECTRONICS As we leave 2018 behind, it should be noted that the challenges faced by all consumers of electronic components in our industry this year have stretched teams both physically and mentally. We will continue to see pres- sures across the supply chain through 2019 and beyond, so there is no rest for the weary. Companies that fostered relationship growth and partnerships with the supply base when the market was tilted more to the buyer's favor are proving to be more successful in attaining support during the current under-supply condi- tions. The true test of a partnership can be examined when the market is out of balance. Relationship management should not be a tool used only when convenient or in need but developed as a core tenant of any successful supply chain management philosophy. It is highly suggested to have your supply chain management team work very closely with both the customer and the supplier base to ensure that a minimum of a full year of demand is covered. There is little to no abil- ity for the market to absorb demand increases within this period. It is also highly suggested that you work closely with your customer to eliminate single-sourced commodity compo- nents as a single source limits flexibility in the supply chain solution. The bottom line in this type of market is you must communicate often and thoroughly to ensure your needs are not only understood but also acknowledged. Why Are We so Challenged? The overall electronic component market remains in a state of under-supply related to many subsets of component categories. After years of continuing pressure of decreasing prices in a range of 4–8% per year, the market finally hit its breaking point in late 2016 and into 2017. Many suppliers delayed adding new capacity expansion due to the reduced profit- ability driven by the continuous pressure on price reduction coupled with an over-supply market from 2011–2016. When you combine this lack of capacity expansion with greater electronic content within today's markets and account for the expansion of all global econ- omies, you create a perfect storm of events that has led us to the market today where long lead times, constraints, and allocations prevail. No Rest for the Weary: Supply Chain Pressures Are Here to Stay!

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