Semiconductor sourcing is a process vital for businesses that manufacture electronic devices like smartphones, computers, tablets, and appliances. Without semiconductors, these products simply wouldn't function. However, thanks to the myths surrounding the sourcing of semiconductors, many companies tend to possess unrealistic expectations, which can lead to poor decision-making. In this article, we aim to debunk these misconceptions, providing clarity and insight into electronic component procurement.

Many assume that buying electronic components is a quick and seamless process. The reality seems to paint a different picture. Lead times which refer to the duration between placing an order for a product or service and receiving it, can vary depending on factors such as manufacturing processes, supply chain dynamics, and production capacity. Understanding lead times will help your business to better plan your procurement strategies effectively, such as when and how much to order. Moreover, knowing the time it takes to receive ordered items enables you to align procurement activities with project schedules, maintaining continuous component availability and preventing delays.

Contrary to popular belief, semiconductor supply chains are anything but simple or straightforward. Not only are they complex, they are also highly susceptible to the following factors:

• Global Demand Fluctuations

Changes in demand can impact the semiconductor supply chain in terms of production volumes, pricing dynamics, and lead times. These fluctuations are driven by factors such as technological advancements, natural disasters, evolving consumer preferences, and shifts in economic conditions.

• Geopolitical Events

Given the supply chain dynamics, you must have the foresight to anticipate and mitigate risks for an uninterrupted electronic component procurement process. By proactively planning and strategising, you may navigate challenges and capitalise on opportunities accordingly.

Another common myth suggests that prioritising cost-effectiveness is more important than considering quality and other variables. While we can’t deny that cost is a key factor, compromising on quality can result in higher long-term expenses and performance issues. Imagine opting for low-cost suppliers and choosing cheaper electronic components prone to defects. This may save you some money initially, but driving up maintenance costs over time, resulting in warranty claims, product recalls, and customer dissatisfaction. To maintain reputation and credibility, it is vital for you to strike a balance between affordability and quality, thereby mitigating risks and ensuring product quality.

4. Innovation in Sourcing

Many businesses still follow the traditional semiconductor sourcing method. The truth is, innovation is rapidly transforming industrial sourcing practices. Technologies such as artificial intelligence (AI), automation, and advanced materials are no longer novel concepts in semiconductor manufacturing. These high-tech innovations have the capability to streamline repetitive procurement operations like order processing, invoicing, and inventory tracking, on top of detecting defects in semiconductor components with greater accuracy to improve product reliability.

Learn more: The Role of Generative AI in Optimising Electronic Component Sourcing

To effectively navigate intricate semiconductor sourcing, it's crucial for your business to understand the truths surrounding the process. By shedding light on these common misconceptions, your business can adopt better sourcing strategies to stay competitive in the industry.