We are having one seminal year after another! 2019 was the year of trade wars, 2020 was the pandemic, and 2021 was the year supply chains broke, so what of 2022? I asked a lot of executives for their insight and prediction for the coming year and over a short series of features I’ll be sharing what they have to say. Here’s part one with a dozen or so executive views, more to follow…
From the c-suite of the EMS industry
Carl Hung, President and CEO at Season Group.
For 2022, I foresee a supply chain crunch persisting and potentially worsening due to several reasons:
Many orders have been changed to non-cancellable non-reschedulable (NCNR) status which means that there is even less flexibility than before as demand continues to rise and component shortages persist. A way out is to turn towards engineering design flexibility, to give your products more component options to work with.
Purchase orders (POs) from clients are placed much earlier in advance, and in turn our POs to suppliers are also made earlier. This trend of long lead times and early POs means that there will be great pressure on cash flows on us manufacturers. EMS companies that rely on banks for finance will be seriously challenged, especially if interest rates rise. Financial risk is definitely what EMS companies have to watch out for going into 2022.
The emergence of the Omicron COVID-19 variant has also put many countries on red alert, which affects the shipping and logistics sector. Couple this with the holiday season where many shipping sector workers want to be home for Christmas or Lunar New Year, temporary shipping service delays will have large knock-on effects to the supply chain as we go into the new year.
While the times ahead may be tough, but working closely together with our customers and strategic partners will allow the EMS market to continue to grow! Let’s get ready for 2022!
Originally published on EMSNow on 10th December 2021
