Think Ahead

Getting busy yet?  Are your wishes for a recovering economy finally coming true?  We’ve been busy preparing for the upswing in volume we see coming on the horizon.  If the first quarter of 2006 is any indication, this will be our biggest year yet. 

We know that when we get busy it means our customers are busy.  It’s good to see our industry thriving in this stronger economy.  

The downside of this increased economic activity? 

Component lead-times are getting longer.

This trend that started several years ago has gotten worse recently with the increase in activity—everyone’s getting busy.  Not only have we seen some lead-times pushed out beyond sight but prices have increased as much as 50% on some components.  We’ve seen 16-week lead-times pushed out to a horrendous 24 weeks!  Why is this happening?

Some suppliers are saying, “Our stocks are low and we can’t produce parts fast enough. That’s why lead-times are long and prices are high.”  Others claim, “It’s driven by RoHS. Everyone wants lead-free parts.”

While that may be true, consider this:  When the economy initially crashed after 2001, some of the larger contract manufacturers cancelled their parts orders, leaving component manufacturers holding the bag. As a result factories were closed down, equipment was sold off for pennies on the dollar and many people lost their jobs.  Perhaps component manufacturers are really trying to tell us: “We’re taking it slow because last time we lost a lot of money. Maybe once we’ve fully recovered our losses you’ll see lower prices and shorter lead-times.”

No matter what the cause, the fact is that many parts right now are hard to get and are more expensive.  With the RoHS compliance deadline of July 1, 2006 just a few months away it’s likely to worsen before getting better!

Don’t fall into the trap of being so occupied by your day-to-day activities that you can’t take the time to plan ahead.  Placing your orders early gives us the time to work with lead-time issues to keep your production on track.  Several of our customers are getting ahead of the game by placing annual purchase orders with scheduled delivery dates aligned to their sales forecasts. There are three main advantages to this:  1). You get in the queue TODAY for parts.  2). You lock in TODAY’s component and assembly prices.  3). A higher quantity order means LOWER UNIT COST even though you can schedule out shipments.

It’s a simple solution!

Beat the rush on parts and price increases by placing annual orders now for all your assemblies!


For quotes contact Paul or Abdul at (206) 782-2325