After seeing solid growth in design activity throughout 2019, particularly among small and medium-sized OEMs and contract manufacturers, we at RS Components see some really positive momentum going into 2020 as well as optimism from customers across the electronic component industry. In addition, with our DesignSpark online community for electrical and mechanical designers and engineers, we have insight into the conversations engineers are having as well as design tool usage among millions of global members. Given what we are seeing with our customers and in our online community, we expect to see continued strong demand in the coming year.
Supply Chain Innovations
Product supply chains will continue to evolve at a rapid pace. Customers want increased visibility and transparency from their supply chain partners in terms of compliance and sustainability most of all. The technology that’s arising due to 5G, industrial automation and IoT requires supply chain partners to innovate to compete and deliver to meet customer demands. Thus, suppliers will need to demonstrate greater expertise in both compliance and sustainability to keep up with the convergence of mechanical and electronic design. This is in addition to providing full lifecycle product support—from design to obsolescence—something we have prioritized at RS Components and see other supply partners emphasizing as well.
To optimize the supply chain and minimize inventory build, purchasers and suppliers will need to use digital channels more effectively. Supply chain partners who can help streamline daily procurement needs with product solutions across technologies, product categories and customer needs will have the advantage. Increasingly, customers are looking for quicker response times and less shopping around, which means the more a supplier can do—and do well—the better.
Improved Lead Times in 2020
In 2020, I think we will see lead times normalize after the significant inventory corrections we saw in 2019 and end of 2018. Based on what we are seeing at RS, with some exceptions, lead-time challenges in multilayer ceramic capacitors (MLCCs) and discrete semiconductors seem to be resolved or near-resolved as capacity and product stocks have generally grown. Across the majority of mature electronics products, we expect lead times to improve to between 8 and 16 weeks. One exception may be in transportation, where we will be closely watching lead times across the sector and especially around smart and electronic components for electric vehicles because demand and innovation continues to be so strong.
If I had to give one piece of advice for customers going into 2020, I’d tell designers and purchasing professionals to communicate with us more. RS Components and other distributors are able, willing and excited to partner with customers across the entire product lifecycle. Think of us as not only suppliers, but collaborators who can help you with your design challenges and needs to speed up your time to market.
