The impacts of the COVID-19 pandemic since its emergence in 2020 have been far and wide. Plagued by shutdowns, shelter-in-place orders, and infection rates, businesses and consumers alike had to pivot to survive the sudden changes in how the world works. COVID’s reach affected businesses everywhere, big and small, including electronic component distributors.
Before the coronavirus swept across the globe, waves of shortages, price hikes, and lengthening lead times weren’t unusual for manufacturers and distributors of electronic components. For example, a significant surge in demand on one side and a critical parts shortage on the other would invariably disrupt the system.
However, original equipment manufacturers (OEMs) implemented workaround strategies to reduce supply risk and relieve these shortages - and the electronic components market was relatively balanced as we headed into 2020. Then, COVID-19 disrupted everything, everywhere.
As we head into the last quarter of 2022, we’re analyzing the present state of electronics distribution today as we begin to (hopefully) overcome the pandemic’s overreaching effects.
Supply of Electronic Components
As mentioned, supply trade disruption existed pre-pandemic. However, none were as drastic as COVID’s effects, which have lasted longer than anyone expected. Thanks to continued infections and lockdowns (especially in China), electronic components distributors in the USA and abroad are still experiencing unpredictable manufacturing and labor disruptions, growing demand, and rising gas prices.
Throw in recent weather-related and other interruptions, and the growing gap between supply and demand has not only widened exponentially since 2020 - but continues to plague the industry today.
Number of Online Transactions
The ecommerce industry has climbed steadily since the early aughts. However, the pandemic in 2020 sent online transactions into hyperdrive. Businesses and consumers who were once reluctant to adopt new technologies and ecommerce processes were forced into acceptance to endure the pandemic. This necessity prompted many changes in ecommerce, most for the benefit of all involved.
Not only is ecommerce much more widely accepted overall, but its rapid growth has nudged online retailers, in both B2B and B2C, to focus more on the buying and delivery experience to meet consumer expectations and maintain customer retention. So, the bright spot here is that online transactions are not only more prevalent across all industries, but the entire process is faster and easier than ever before. Moving forward, as technology continues to advance ecommerce capabilities, we expect online distributors of electronic components to continue trending up.
Cost of Transport
Fluctuating costs have always plagued the transportation industry, and we’ve watched them rise and fall many times. Even before the pandemic, this sector was experiencing unsettling fluctuations in fuel pricing, tariffs, embargos, and plenty of uncertainty around global trade. However, the industry has experienced unprecedented setbacks since 2020.
Today, fueled by pandemic-related increased demand, decreased capacity, container and labor shortages, and political unrest, fuel costs have risen steadily with very little relief. Therefore, we can expect fuel surcharges to continue hampering freight capabilities, especially over the road, if the current socioeconomic climate persists.
Inventory management for a distributor of electronic components has always required a great deal of forecasting based on market trends. However, the pandemic sent inventory needs into a tailspin. Many of the same factors affecting transportation (i.e., more demand, less capacity, and container/labor shortages) have also impacted inventory stock.
Therefore, some suppliers have opted to reduce product inventory to offset the deficits, which is a short-term fix that affects electronic parts availability for consumers. Only time will tell if inventory levels will “level out” for electronic components distributors in the USA as new covid variants strain production in China and transportation systems continue to struggle.
Manufacturer Shipping Time
As ecommerce experienced steady, yet manageable, growth in the years leading up to the pandemic, manufacturing shipping times kept pace with the rising demand. However, COVID-19 stressed the system to unmanageable levels as manufacturers struggled amid ongoing, unexpected challenges, causing severe delays in shipping times for most goods, including electronic components.
While countermeasures like increasing port hours to 24/7 and new air freight services will help alleviate some delays, the road ahead isn’t clear. Moving forward, the manufacturers who have adopted new technologies, more localization, and greater flexibility will overcome shipping challenges ahead of those that did not. Better communication is also helping, and the electronic component distributors focusing on transparency and trust-building through delivery-related communications will have a better chance of withstanding delay challenges now and in the future.
Importance of Omnichannel Approach
Before the era of COVID-19, omnichannel approaches were favored by the players in the industry who had enough money and resources to facilitate multi-touch shopping experiences. Omnichannel was a great idea, but it was not a necessary practice - yet.
However, thanks to a greater demand for “amazon-like” shopping experiences in the wake of the pandemic, an omnichannel approach is now necessary to meet consumer demands and expectations. Basically, an electronic component distributor must be equally present online and offline to thrive in today’s environment - and the customer needs to feel involved every step of the way.
Despite the recent disruptions to the global industry overall and electronic component distributors, in particular, Peerless Electronics (an employee-owned company) has steadfastly and successfully managed to overcome these various challenges and continues to stock the parts you need when you need them.
Thanks to an uncompromising focus on technological advancement and a customer-first mindset, Peerless continues to offer a large and diversified inventory of electronic components and on-time shipping, including over 50 value-added services and custom-tailored technical support.
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Staying one step ahead with technology Peerless had implemented for its work force the ability to work remotely pre-pandemic.
Peerless found new ways to conduct business meeting with suppliers and customers during lockdowns interacting with customers virtually during the design stage and staying on point, current and up to date with our suppliers not missing a beat.