The electronics market underpins much of global technology, with this sector encompassing everything from mobile phones and digital devices to accessories and more. With how fundamental electronics are to the modern world, it’s no surprise that the sector is expected to reach $464.6 billion in revenue in 2024.
Source: A graph to show the overall revenue of the electronics market from 2017 to 2029.
With an industry that has an international scope and relies on distinct parts from different suppliers, this field is especially prone to supply chain strain. Especially during seasonal peaks when demand increases, logistical bottlenecks can cause major delays. To stay ahead of potential delays, businesses need to understand how to manage risks in the electronics supply chain.
Juggling financial pressures, supplier relations, cybersecurity risk, and other factors that may impact your suppliers is vital when creating a sustainable and effective electronics supply chain management.
Understanding Seasonal Peaks in the Electronics Industry
The electronics industry is tied directly to consumer culture. Whether someone is looking to buy the new iPhone or wants a new computer before heading to university, there are always purchases flowing in.
Typically, periods like Black Friday, Cyber Monday, holiday periods like Christmas, back-to-school seasons, and new product launches all cause a major increase in global demand for electronics.
For example, each December sees a major increase in online purchases of electronics as people shop for the festive season. In 2023, December retail electronics sales reached a new peak, rising 8.9% from the previous year to $10.8 billion.
Source: A graph to show the December peak and the surge in sales during this period.
While many of these periods are annual or follow a yearly trend, they still continue to increase pressure on suppliers and create difficulties in the electronics supply chain. Electronics suppliers have to scale their operations to meet demand during these periods, making managing the logistics of this supply chain even more complicated.
Identifying Key Supply Chain Risks During Seasonal Peaks
Seasonal peaks place additional strain on the electronics industry as consumer demand increases. As companies attempt to scale their operations to manage this demand, several potential factors can emerge that impact the supply chain.
Here are some of the key supply chain risks that are especially common during seasonal peaks:
- Supplier risk: During peak times, electronics companies will have to deliver more products. When a business relies on a small handful of suppliers, it increases the potential risk of a supplier failing and being unable to deliver. Even small supplier-side delays can create major disruptions and cause problems during peak seasons.
- Logistical risk: Logistics and transportation risks relate to a company’s inability to deliver products. These delays could arise from limited shipping capacity during peak seasons, customer issues, increased traffic on the roads, or even last-mile delivery issues like missed delivery windows.
- Inventory risk: Businesses may experience surges in demand during peak periods that can lead to stockouts. Alternatively, miscalculating how much demand a seasonal peak will cause could lead to overstocking and increased holding costs.
- Financial risk: Financial risks like cash flow pressures or raw material price fluctuations are intensified during peak periods. These seasons force businesses to buy raw materials to meet demand, despite their cost, which can impact profitability. Additionally, season surcharges could lead to higher production and shipping costs.
While these categories are central and often the leading causes of disruptions in the electronics supply chain, they are far from the only factors. When calculating supplier risk scores, Prewave draws upon over 100 different risk factors, each of which could play a role in the wider risk matrix of a company.
Assessing and Prioritising Risks in the Electronics Supply Chain
The most effective way of mitigating risks during seasonal peaks is to ensure that your business has a comprehensive risk identification and management process in place.
Here are three vital steps to take when assessing and prioritising risk in the electronics supply chain:
- Risk identification: The first step to assessing risk in the electronics supply chain is to identify the potential risks that could impact you. There are several tools you can turn to when identifying risk, like historical data, supplier records, and risk matrices. Leveraging these tools will allow you to determine where risk lies in your supply chain, which will then allow you to find strategies for mitigating it.
- Risk assessment: After identifying core risks in your supply chain, you can then assess the likelihood and impact of each risk. A SWOT (Strengths, Weaknesses, Opportunities, Threats) framework and a Failure Mode and Effects Analysis (FMEA) are two useful frameworks to employ here. Both of these will help you identify what the effects of disruption would be, which will then bring clarity around how disastrous of a threat they pose to your organisation.
- Risk prioritisation: Finally, with clear insight into the risks and the potential impacts they could cause, you can begin to prioritise risk in your business. Some risks may threaten to disrupt your entire supply chain, making them a high priority to prepare for. Always ensure that the most critical risks are addressed first.
Following these steps and developing an enhanced risk management plan allows electronics supply chain businesses to prepare for potential disruptions, even during peak periods. When facing increased demand, having active processes in place that you can resort back to will help to streamline risk management and response.
Effective risk management will take the pressure out of high-demand periods, providing a comprehensive strategy to mitigate risk ahead of time and allow operations to flow naturally.
Prewave’s Solutions for Managing Supply Chain Risks
Prewave offers a unique solution for companies in the electronics industry that are looking to simplify supply chain risk assessment and management. As an industry-first platform, Prewave can offer comprehensive insight into your complete supply chain risk lifecycle, even able to take supplier actions via the Prewave Action Platform.
With Prewave, businesses can stay informed about how global events, local changes, regulatory shifts, and evolving risks pose a threat to the electronics industry. We offer a range of solutions that help to enhance supplier monitoring and provide increased visibility into the electronics supply chain.
Real-Time Risk Monitoring
New risks and disruptions can emerge at any time. Especially during seasonal peaks, where orders may suddenly spike, real-time monitoring helps to reduce the risk of significant disruptions and enables businesses to respond rapidly to disaster events.
Prewave offers two central real-time risk monitoring systems to enhance visibility into your supply chain:
- AI-driven insights: Prewave leverages a central AI-driven platform that continuously monitors numerous global data sources to detect early signs of risk. Our platform can synthesise data and news streams to detect rising geopolitical tensions, natural disasters, and even local supplier issues. We then condense these insights into supplier risk scores, offering you a comprehensive oversight of how risk is evolving and changing across your supply chain.
- Alert systems: Prewave automatically generates real-time alerts when disruptions or spikes in risk occur. This automated system allows electronics supply chain managers to respond proactively to potential disruptions, reducing the impact on operations and streamlining event responses.
By utilising a real-time monitoring system, your business is always prepared for whatever may come its way. A real-time strategy also enables more effective threat responses, as your company has as much time as possible to develop a response and mitigate the worst effects of a disruption.
Predictive Analytics
Many risks that electronics supply chain companies have to deal with are often signposted for days, weeks, or even months before they become a problem. For example, if a provider of raw materials is able to source less and less a few months in a row, then it’s likely that they will be unable to provide services to your company in the future.
By collecting and collating historical data, businesses can use predictive analytics to pinpoint potential risks and forecast future risk mitigation strategies. Prewave offers two central tools that leverage predictive analytics to enhance the stability of your supply chain:
- Demand forecasting: The electronics supply chain industry can use previous historical data with Prewave’s predictive analytics tools to forecast future demand and accommodate ahead of time. By increasing stock levels before periods that are likely to experience an increase in demand, businesses can avoid the increased pressure of seasonal peaks. Demand forecasting helps to better understand consumer demand and prevent overstocking or stockouts.
- Scenario planning: Predictive analytics is also a powerful tool when applied to risk assessment and strategy planning. Electronics businesses can create “what-if” scenarios and then prepare for the potential risks that they may bring. These hypothetical situations can help to create disaster response strategies and comprehensive contingency plans.
Prewave’s predictive analytics tools offer comprehensive risk assessment, summary, and mitigation planning support.
Supplier Risk Management
Every supply chain business understands that suppliers are everything. A small delay with one supplier can create a major disruption downstream, frustrating customers and creating knock-on effects of missing shipments and delivery deadlines.
Supplier risk management is the process of determining which suppliers could pose a risk to your business and taking steps to reduce that overhead. Prewave offers two systems to help you identify, manage, and reduce supplier risk:
- Supplier assessment tools: Prewave offers supplier monitoring, allowing you a 360-degree insight into the social, political, economic, and environmental factors that could disrupt a supplier. Prewave creates a supplier risk assessment score by combining insight from over 100 different risk categories, giving you a comprehensive insight into supplier stability. From these calculations, you can identify suppliers with disproportionate risk and seek alternative solutions.
- Supplier diversification strategies: Prewave assists companies in identifying and engaging alternative suppliers. Diversifying the suppliers an electronics supply chain relies on can eliminate single points of failure and remove supplier dependency.
Prewave helps your business gain complete insight into your suppliers, with the entire process of setting up our systems taking under two weeks.
Logistics Optimisation
The logistical links that connect different parts of the supply chain are essential to the continuity of the electronics supply chain. If one logistical partner is unable to support your operation, it could create significant delays. Equally, miscalculations can lead to shipments being too small or too large, taking an ineffective route to the destination, or being lost in transit.
Prewave offers several solutions that allow your business to enhance supply chain logistics:
- Route optimisation: Prewave’s logistics tools can calculate the optimal shipping route, helping to avoid shipment delays and mitigate bottlenecks. Effective route planning and optimisation can ensure deliveries are made in a timely manner, even during peak periods.
- Capacity planning: Prewave helps businesses create precise logistics plans, developing a comprehensive understanding of carrier capacity. With these systems in place, your business will be able to scale to match demand with ease, naturally increasing your usage of logistics partners during the busiest periods of the year.
After developing a concrete logistics plan and optimising it with Prewave, your business will be able to handle any spike in demand that comes your way.
Final Thoughts
Effective planning and proactive risk management are vital when aiming to reduce the pressure that seasonal peaks put on your business. The electronics supply chain experiences several surges across the calendar year, all of which can disrupt production and intensify demand. Well-prepared businesses can see these periods as a spike in revenue, having overcome the potential supplier and logistics challenges associated with spiking demand.
Prewave’s advanced AI and machine learning solutions provide comprehensive support in navigating risks caused by seasonal demand. With our systems, your business can operate smoothly through these periods, trusting in your effective risk management and mitigation strategies.
Discover the power of full visibility into your electronics supply chain and a comprehensive risk management solution with Prewave. Book a demo to get started with mitigating risk today.
