We were interested to read a recent article from Supply Management, who posed the theory that electronics procurement professionals have never had it so good in terms of their negotiating power (according to commodity data analyst Supplyframe)
“Thanks to falling lead times, stubborn inventory, uneven demand and declining pricing, Supplyframe argues the weaker-than-expected recovery and restricted demand growth means things will remain a “buyer’s market” well into 2024,
However, it also warns that as end-market demand ramps a number of sourcing challenges may rear their head – everything from low supplier capacity usage rates, constrained supply, demand shifts, inventory fluctuations, geographic pivots, and legacy component issues”
We asked Brian Lombard from the Talent Drive team about his thoughts on how skilled procurement professionals can leverage this situation:
“An interesting article, which discusses the changing demand in the electronics purchasing industry. It highlights a shift from suppliers struggling to keep up with demand to now lowering output, driven partly by a weaker Chinese economy. This is resulting in high stock levels.
Skilled procurement professionals can leverage this situation by, for example, securing longer-term volume contracts. This article highlights the importance of procurement understanding their market and turning market challenges into opportunities for creating value and cost savings for their business”
Supplyframe described prices and supplies as undergoing “normalisation” throughout this year, with trends continuing to stabilise into early 2024.
But it warned there would be no “true normal”, only “a continuing confluence of supply-demand imbalances”.
Consumer electronics demand has now entered its peak period ahead of the holiday shopping season, it said.
However, with inventories declining more slowly than expected and China falling short of economic growth expectations, the recovery may be weaker than anticipated, restricting demand growth – and resulting in the continuation of favourable conditions for buyers.
