Unwavering Commitment to Customers Includes Managing the Supply Chain

Our commitment to our customers is top of mind – always.  We are paying attention to your needs as well as the supply chain that helps us fulfil those needs.  Business continuity and planning have been the cornerstone for us this year.

As the seasons change, we are aware of several factors that may influence our ability to fulfil demand. They are:

  1. Chinese New Year and a second wave of planning at ODMs has led us to believe we will be affected by disruption this winter. This affects not just our primary suppliers, but secondary component supply chains and we see lead time extending and product availability coming under pressure. We have also seen some price fluctuations affecting BOM costs.
    In my previous update I had mentioned our main SoC provider had increased lead times from 18 weeks to 26 weeks.  Many of these orders are actually being delivered at 30 weeks, and some products are extending to a 40-week lead time.  This increase our need for good planning and forecasts from our customers.
  2. We are tracking additional pressure on our supply chain as a result of increased demand for Notebooks and other devices due to the trend for working from home. This has put additional demands on converters and some low value components and scarcity is now an issue and has created shortages in the last 2 months. We also know this is going to affect us during Q1.
  3. It is to be expected that delays in timeframes may well be a factor in warehousing and distribution as staff could be affected by restrictions and measures designed to combat COVID as well as potential key staff shortages.

We want to reassure customers that we have taken significant mitigating action to increase our inventory holdings, build buffer stock and forecast additional kitting and assemblies. Our team is working diligently, aligning closely with our suppliers to minimise this impact.

And, of course, working with you to understand your specific needs will help us to help you. Help us to understand your forecasts. Let’s work together understand the right time to place orders – with the goal of mitigating risk. Our staff will be making time to meet and discuss these issues alongside our partners, and we hope to be able to share further information that will be useful in your planning for this period.

It is my view that many of the issues we see are addressable with good planning and communication. In the meantime, we all hope that you, your family and colleagues stay safe and healthy. If my team or I can help in any way, please let me know and I would welcome the opportunity to catch up personally should time permit.

 

Donald McGarva,
Group Chief Executive Officer