Under The Hood – Back Orders is Giving Us BO

August 3, 2018

I don’t know if anyone noticed, but sometimes things are on back-order. And it seems to be an escalating trend. Our factories did not all a sudden forget that they need to make stuff. They didn’t miss the forecast.

The explanation is a global electronic parts shortage. From what we here at The Farm have managed to dig up, it is a perfect storm. A perfect BO storm. Many parts suppliers, still reeling from the recession of a few short years ago, never ramped up production and decided to run lean-and-mean. At the same time, the electronics world has been in a renaissance of sorts. Electric cars, combined with the IoT of things has increased demand for even resistors, capacitors, inverse-flux-ridiculators, all the parts it takes to make a wireless mic, audio DSP box, toaster oven….

Most manufacturers had numerous sources for these parts…They know about such things…but still they have run out. And they are too careful to just buy whatever is on the street. The parts need to be tested, validated, or your toast will not come out as toasty as one would enjoy.

Just google “electronic parts shortage”. Don’t google “electronic PANTS shortage” ….I made that mistake.

So, what can be done? The first thing is to realize that our “just in time” industry might be not as snappy as it once was. There are lead times now. The customers won’t help. They live in a world of click it and it shows up the next hour….so they are not going to help.

It may be time to consider some shelf stock of mission critical devices that get used over and over. Maybe your factories might consider some interesting credit terms to help keep stuff on the shelf. Most importantly, now is the time to engage your reps. We are here to give you the news before it is news. Register your jobs. Give us a heads up. We know not every deal happens when predicted. We know some deals even go away. We won’t beat you up with the data digging for orders. We will use it to forecast…we are not asking just to click a box in CRM (although we will be clicking many-a-box).

So, don’t let back-orders give you BO. Engage, register, forecast, share…and maybe even stock.

Nobody wants to take a smellfy.

John Hood