One of the lingering impacts of the COVID pandemic has been a worldwide shortage of semiconductors. Because of this, integrators often ask how much lead time they can expect for Sielox products. They’re surprised when we tell them that our products are in stock and ready to ship. They’re not used to hearing that from other suppliers.
When the shutdowns began in early 2020, vehicle sales plummeted, causing automakers to scale back production overnight. While demand for the computer systems that run automobiles nosedived, interest in consumer electronics soared, as millions of people were stuck at home in lockdown conditions.
Computer chip manufactures switched production lines to serve consumer electronics, only to see demand for automobiles rebound during the third quarter of 2020. As a result, in early 2021, lead time for many types of semiconductors was up to a year, according to the Harvard Business Review.
Global supply chain crunch
Even though companies have re-opened and begun receiving chips again for production, they’re still having trouble fulfilling orders. Lead times for laptops, for example, have been as much as 12 weeks. Some suppliers are so far behind in delivery schedules, it will take a long time before things start getting back to normal.
To make the situation even more challenging, the rates for shipping containers are at historic highs. According to data by Drewry, the world container index is over $10,000 per 40 ft. shipping container, nearly 300% higher than a year ago, making global shipping more expensive.
Short term strategy not enough
The shortage of semiconductors is one example of the volatility of the global supply chain. Companies that adhere to a lean manufacturing mindset—only keeping enough parts on hand for a few weeks or months—are especially vulnerable. The good news is that none of these issues have impacted the ability for Sielox to maintain production levels and fulfill orders.
Maintaining local production
Sielox has been designing and developing security software and hardware solutions—including controllers, readers, and cards—since 1979. We have always been proactive and strategic about ensuring our supply of key components.
Because we only design our field hardware, we’ve partnered with a U.S.-based manufacturer in South Jersey called Syscom for the last 15 years. We’re not only proud that our products are made in the USA, this is also how we have managed to protect our inventory of finished goods during the COVID pandemic. Syscom is twenty minutes from our headquarters. We don’t have to deal with customs or wait for our products to arrive from offshore manufacturers.
Even before COVID, we asked Syscom to stockpile components that were approaching end of life in order to give us time to redesign our boards to accommodate replacement parts. A regular contract manufacturer would normally have 4-6 months of inventory on hand. However, we’ve asked Syscom to hold up to a year’s supply of the parts we need. We currently have double the inventory of finished goods in our warehouse than normal because we want to guarantee that our customers can get our boards and other components whenever they need them.
Utilizing U.S. distributors
Our manufacturing partner is also great at giving us fair warning when they anticipate potential supply chain delays. For example, we are seeing component-level delays with parts that have nothing to do with chips, such as plastic connectors and resistors. Metal has soared in pricing and mounting bracket prices are up. What gives Sielox a competitive advantage is our contract manufacturer has tremendous relationships with distributors based in the U.S. who have a business incentive to keep their contract manufacturers happy and well-supplied.
Keeping finished products in stock and ready to ship
Sielox is always preparing for fluctuations in the supply chain by continuing to strategically stockpile vital resources. Sielox will continue to maintain a large inventory of finished goods while we wait for the COVID-19 crisis to pass and the supply chain to stabilize. Meanwhile, Sielox customers can rest assured our products won’t slow any of their projects down.