Challenges in the electronics supply chain

Global demand for electronics has experienced an unprecedented upswing over the past year. At the same time, the shortage of ICs or 'chips', other electronic components and many required materials has had a profound impact on the electronics supply chain. What can companies do to cope with the situation? The author reflects on his experiences as a farmer's son and draws parallels.

In 2021, the global demand for electronics experienced an unprecedented upswing, triggered and supported by the acceleration of the digital transformation, the Covid-19 pandemic and the fundamental trend towards renewable energies and electric vehicles. The shortage of integrated circuits (ICs or 'chips') and other electronic materials to meet this demand is having a profound impact on the electronics supply chain.

In response to this extraordinary demand for electronics, huge investments are being made throughout the electronics supply chain. One fundamental response, of course, is to increase manufacturing capacity for electronics, which is hampered by the time and cost required to build a manufacturing facility or 'fab' for ICs.

Many electronics manufacturers, including Keysight, have established a plan to increase the manufacturing capacity of electronic measurement solutions. These efforts include improving resilient operations, supplier collaboration, strategic sourcing and value engineering.

• Resilient processes that ensure people can work safely include safe operations and vaccination programs - in Keysight's case for more than 98% of the workforce. However, they also include accelerating the digital transformation of processing, manufacturing and logistics processes.
• Collaboration with suppliers is particularly important when bottlenecks occur and committed partners in the supply chain help to deliver more components and options.
• Strategic sourcing is about investing in alternative sources and sound supply-based analysis to extract every available part from the global supply.
• Value engineering involves redesigning components or assemblies to maintain the performance of the existing design while replacing the scarce part with another available part. This is expensive and takes time, so reengineering a component or assembly is only used in the most necessary cases.

The Covid-19 pandemic has not only accelerated the digital transformation of businesses and consumers, but also the digital transformation of the electronic supply chain and manufacturing. This ranges from AI algorithms to predict component availability to software that predicts upcoming manufacturing problems. This allows action to be taken before future failures stop the line. Predictive insights are provided by advanced software, such as the PathWave Manufacturing Analytics platform from Keysight Technologies.

Growing up in a community

Growing up in the Midwestern United States, where both my maternal and paternal grandparents were farmers, I grew up with the dangers of modern agriculture and experienced firsthand the dangers that can come from the many machines in use. At the same time, I have learned that the worst events bring out the best in the community.

One of the farmers in our region was manually clearing his combine harvester of unwanted material inside during the time-critical maize harvesting phase. However, he had not switched off the machine as this would have taken extra time and he had to finish the harvest quickly. As a result, he suffered a terrible accident, which I won't go into detail about - just this much: he was hospitalized for several months. Without being asked to do so directly, several neighbors helped to finish the harvest and make sure the farm was taken care of.

Today, such a collaborative response is facilitated by 5G communications, shared planning worksheets and access to digital records of how the farmer has cared for his crops and livestock. It's no surprise, then, how quickly farmers are embracing digital technologies - from drones to advanced planning software.

Electronics manufacturing, like agriculture, transforms natural materials into valuable assets that improve the lives of others. The two are also similar in that the ecosystem or events can present challenges that individuals cannot overcome, but require the resources and cooperation of a community.

Community response

Like everyone in the global electronics industry, Keysight Technologies faces the challenge of procuring sufficient materials to manufacture its test and measurement solutions for electronics manufacturing. We use our four-element plan to address these challenges, but sometimes that is not enough to meet critical short-term requirements.

Recently, we faced the challenge of sourcing a modular power supply assembly for one of Keysight's most complex manufacturing test solutions. We ensured stable operations during the pandemic and made every effort for strategic sourcing and collaboration with suppliers. We even invested in developing alternative designs, but these efforts could not be implemented in time to meet the delivery deadlines required by our customers.

These modular power supply assemblies can be replaced after the solution has been installed in the event of a rare assembly failure during operation. We have some units in stock worldwide and some have been redeployed, but this has not been enough to meet the high demand for newly manufactured systems. How could we source more modular power assemblies to meet the short-term need to increase our customer's manufacturing capacity?

We realized that customers may have units sitting in local repair warehouses or in actively used underutilized systems. Our systems are expandable so a system can have up to four of these assemblies and the current utilization of the system may not be using all four installed modular power assemblies.

We have started a program to help our customers find underutilized modular power assemblies so they can be reused in a newly manufactured system they have ordered. To save additional time, we typically arrange for the new system to be shipped without these modular power assemblies and install them when the system is shipped.

We have seen several cases where we have been able to deliver a new system by postponing the final integration of a critical component that was available through a non-standard supply chain. Similar strategies are used for other complex products, such as vehicles. We have some cases where customer A has provided modular power supply units to help customer B. This is an exceptional example of how the electronics industry helps each other in times of crisis.

Customer reengineering

When it came to completing the farmer's harvest after the injury, it didn't make sense to use only the farmer's equipment. The spontaneous relief effort opened up temporary access to much more human labor and so it was also more efficient and effective to use more equipment and speed up the harvest. We also helped to improve the infrastructure of the farm to increase efficiency, for example by repairing or upgrading inefficient equipment. So a community can be very creative when it comes to getting a result!

At Keysight, we used our fourth supply chain measure, value engineering, to help our customers redesign their existing solutions for greater productivity. We engaged our most capable product development (R&D) engineers to work with our solution engineers in sales to help customers identify opportunities for upgrades to existing solution capabilities. They have developed new digital tools to identify which hardware and software upgrades offer the best ROI to increase productivity. We are also benefiting from the new insights we have gained from working closely with our customers, which are already having an impact on our next generation of new products being developed.

One example of this was a customer's discovery that their systems would benefit from an upgrade to the measurement components to enable faster and more parallel measurements. This was achieved sooner than any new plans to expand manufacturing capacity. In fact, in this case we are providing our latest digital analysis platform to increase productivity even further. Another example of accelerated digital transformation.

By focusing on the customer outcome of increasing production capacity, we were able to choose from a wider range of capabilities, some of which were less affected by the current supply chain and could therefore be delivered faster.

Conclusion

The possibilities of digital technologies and human innovation are impressive, especially when applied during a crisis. Growing up in a farming community has taught me lessons for our global electronics community. When we enable a collaborative response, solutions are found faster and more efficiently, and everyone contributes. This has helped turn crises into partnerships for mutual success. Remember that our customers are also our neighbors!

Devising a response to the challenges of the global supply chain can also be applied to your customers' results if your products and solutions are part of that supply chain. This algorithm is called recursion in the software and is one of the most powerful algorithms around. Reshaping your customer outcomes, particularly through the use of digital technologies, is an excellent source of innovation and accelerated value creation.

Ensuring the success of our neighbors is an enduring value, and in times of crisis, we must remember that we must be flexible and innovative to achieve that success. This influenced my grandparents' generation in agriculture and continues to influence me today in the global electronics supply chain community.