A reverse trend towards deglobalization became apparent in the face of the COVID-19 pandemic, the US-China trade war, and the Russo-Ukrainian conflict.
Globalization became the buzzword some 30 years ago and has since firmly established its ideology in all aspects of lives and businesses. Driven by the exchange of knowledge and technological innovation, global supply chains evolved tremendously, became increasingly connected, and showed clear signs of convergence.
The buzz gradually loses its appeal in more recent years and a reverse trend towards deglobalization became apparent in the face of the COVID-19 pandemic, the US-China trade war, and the Russo-Ukrainian conflict.
A stable supply chain is critical for a company to maintain normal production and business operations. Distributors play a key role in the industry chain. They are required to relay important market information and communicate customer demands to suppliers in a timely fashion, thus ensuring that upstream and downstream players can quickly produce and provide goods. At the same time, distributors also collaborate closely with their logistics partners to deliver goods to customers on time.
At the 2022 DIGITIMES Supply Chain Summit, Prince Yun, President of Avnet Asia Pacific, said, "In the next 3 to 5 years, geopolitical issues, trade conflicts and new strains of COVID-19 will continue to evolve and impact the global supply chain ecosystem.”
“In the face of these multiple challenges, many companies showed their lack of understanding of overseas suppliers and manufacturers, and realized just how fragile their supply chains actually were,” Prince Yun added.
Essentially, competition within the manufacturing industry boils down to companies’ speed of innovation and the resilience of their supply chain. As manufacturers focus on innovative R&D and market expansion, they rely on strong and reliable supply chain support from distributors to increase their competitiveness at all levels of their operations.
Prince Yun, President of Avnet Asia Pacific, speaking at the DIGITIMES Supply Chain Summit
In the past, numerous companies expanded their supply chain capabilities and operations overseas. As governments around the world imposed safety measures to combat the pandemic two years ago, this became a risk for many businesses. They were forced to face the prospect of potential losses from overseas supply chain disruptions.
While discussing about the critical areas of development for supply chains in the next 3 to 5 years, Prince Yun said, "In order to quickly adapt to the increasingly complex global environment, Avnet continuously review and establish existing and new supply chains to stay competitive. We aim to create value by making our supply chains agile and flexible."
Avnet's ability to create secure and stable supply chains for all customers is intrinsically linked to its efforts in developing and continuously improving its digital services. Thanks to its outstanding design capabilities, Avnet is able to provide truly world-class supply chain support. To date, Avnet has connected more than 100,000 of its customers to tech companies around the world, providing them with cost-effective, value-added services and solutions that allow them to focus on the innovative R&D internally that is integral to their success.
Avnet’s SCaaS Capabilities
Geopolitical conflicts, supply chain issues and high logistical costs have added tremendous pressure to manufacturers and accelerated the process of spreading out distribution capabilities in more countries. At Avnet, we have rolled out measures to improve supply chain efficiencies, as well as to minimize risks. An example will be Avnet’s Supply Chain as a Service (SCaaS) solutions to support businesses from design to delivery."
Avnet’s SCaaS services involve supporting business partners in inventory management and logistics optimization. By improving the efficiency of these operations, logistics and raw material costs can be offset. This way, Avnet guarantees the security and stability of its clients' supply chains through 3 fundamental concepts.
Additionally, Avnet actively cooperates with customers, makes arrangements with original material suppliers, and leverages global sourcing in order to overcome material shortages as much as possible.
Future-proofing the Supply Chain
Just-in-time manufacturing has been one of the most important production models in the past few decades. Essentially, the model seeks to synchronize logistics with the flow of information in the manufacturing process, achieving an ideal scenario where an exact amount of materials is delivered just in time to a specific location to manufacture quality goods. This allows for a lower inventory level, shorter work times, lower costs, and higher efficiency.
As the world economy recovers, the pandemic has taught us a valuable lesson – “just-in-time” inventory is no longer viable in today’s context as the world grapples with lead-time issues. Prince Yun advised, "Businesses should adjust their strategies and change their mindsets to adapt to the times. At this point in time, “delayed deliveries” are no longer acceptable in the global market."
Agile, flexible and committed to our customers’ success, Avnet is the ideal partner to help partners navigate today’s turbulent global electronics market landscape.
Endnote:
Global capital markets are volatile and there is a greater hedging demand. With each passing day, global supply chain struggles are becoming increasingly evident. This year has proven extremely challenging for the entire electronics industry, with the complex market environment posing unprecedented difficulties for manufacturers and distributors. Avnet is a world-leading technology distributor and solutions provider, positioned in the center of the technology value chain. In the face of these challenges, Avnet continues to work closely with its partners in the global electronics supply chain, sharing information in order to help its clients navigate complex and turbulent global situations.