Wurth gears up to solve supply issues
Issues with sourcing components, particularly electronics, are having an impact on a growing number of companies across a range of sectors, from automotive through to industrial machinery. One company well placed to help manufacturers weather the storm is Wurth Electronics UK Ltd. As a major manufacturer and supplier of electronic and electro-mechanical components ranging from power magnetics, opto-electronics, EMC components and power modules, Wurth has seen how supply chain issues have hindered plans and forced a rethink of how production is organized.
James East, General Manager UK and Ireland, Wurth Electronics, a major sponsor of Manufacturing and Engineering Week, says: “With a huge fall in demand through the middle of 2020 and then a very quick uptick at the back end of the year, this was a perfect storm of global situations. Local situations meant that not only were things like integrated circuits (ICs) in very high demand, but the automotive market also ramped up very quickly recently as did the mobile phone market and in turn, everyone’s demand went up. So, components shortage was, and probably still is, the biggest challenge that we've had in electronics in the last 18 to 24 months.”
James stresses that the shortages have implications beyond high demand and low supply. “We may think of supply chains as people buying and selling things, but from an engineering perspective, it places engineers under a huge amount of pressure to design with parts that they can actually get hold of - what they think is available in the morning may not be available in the afternoon.
“Those engineers are having to work really quickly and intensively to design alternative parts or circuitry or even redesign their entire product.”
Combined with the effect of the coronavirus lockdowns, the shortage of supply of ICs has had a particularly huge impact in the automotive industry, which increasingly relies on ICs to manage and monitor many aspects of a vehicle’s performance. According to the Society of Motor Manufacturers and Traders, UK car production fell by 6.7 % in 2021, the worst total since 1956, with all the knock on effects for lower production tiers and the wider economy. With the industry expected to ramp up production again this year, this can only turn the screw on IC manufacturers to deliver more product.
But is IC manufacture too concentrated in certain geographic regions and if so, how can this vulnerability be offset?
“There is a trend to move IC production back to Europe and North America and away from China and the Far East, so countries have more control of their own silicon. However, it takes years and several billion dollars to set up a new IC line, so we can’t expect instant results,” says James.
While not an IC manufacturer in its own right, Wurth does have part of the answers to supply chain issues in the way it is structured. Says James: “I think the important factor for us in being able to support customers is that we're privately owned, which has given us the dynamism to make changes in the way we do things. So, throughout the whole pandemic, when output was low because people weren't buying things, we were able to manage as well as anybody because we didn't have shareholders to satisfy at the end of that tough period.
“When the market switched back on over a short time, we had the resources to invest in scaling up very, very quickly. So, for us, it's about having as much stock available for customers as possible. Achieving this has included investing even more in our supply chain, extending capacity in our existing production lines and investing in new production lines in both existing and new locations to spread that risk and build a huge pool of stock into our warehouse.
“And when we've had difficulties in getting products from, in particular, the Far East, where a lot of electronics are manufactured, being able to pay for that delivery means we’ve been able to deliver to our customers - that's been our biggest USP over the last 12 to 18 months.”
Taking the long view
James also believes that customers can play their part by rethinking how and when they order components and looking more to the long term. He says: “The best thing customers can do is use their forecasting and scheduling of orders for all their supplies. I think Just In Time manufacturing has caught people out again and again over the last couple of years and I don't see how people can go back to that very lean manufacturing model with these global situations. I can't see that these supply chain issues are going to get any less frequent or less severe here, and I'm more than hopeful and confident that we are not going to go back to the old way.
“I know not all customers have a perfect forecast for their firm every month, but most customers can have a pretty good visibility of what's going to be in their production for the next three months at least, as well as a pretty good idea of the following three months.
“We can be flexible with how we move delivery dates with our customers, but if there's no forward orders on the system, it makes it very hard for us to plan full scale production when we've got hundreds and thousands of customers globally who all want the same stock.
“So, placing scheduled orders with us is the best way to guarantee that and we want to work with customers to be able to do that. We've got large warehouses all over the world, particularly in Europe and we want to hold that stock for you, but only with those scheduled orders in place.”
If a customer has a known demand of 1000 pieces a month and knows that they're likely to use that for the next six months, Wurth can stock that six months’ supply and schedule the delivery drops accordingly. “We don't have to invoice you as a customer for that,” says James. “It just means your stock is reserved in our warehouse for that delivery in the next six month period, so no one else can take that stock. But if you only place it a month at a time every month and we don't have that in stock or someone else has already ordered it then the lead time for that part may be 12 to 16 weeks. So the best thing to do is place those scheduled orders over the following months, which works really, really well.”
All round support
As well as structuring itself to have stock available, as a manufacturer, Wurth sees excellent customer service as a major part of its offering. “We are the technical experts on our products, and I think that's going to be probably one of the bigger differentiators going forward in the next decade as we have more and more technology to support,” says James.
“Our product offering has expanded massively. We were an inductor and EMC specialist and still are, but now we've expanded into connectors and optoelectronics and a huge range of capacitors and wireless modules and RF and Bluetooth and many other areas.”
As well as maintaining a worldwide technical sales force, Wurth also offers a number of online tools. These include a platform called REDEXPERT which simplifies component selection and performance simulation.
“All of our products have data sheets online,” says James. “We have all the simulation libraries and all the circuit layout libraries available online.
“Our team of external and internal account managers will support our customers directly with products and we go a level above that as well with our field applications engineers. They are happy
to look at customers’ schematics and do design reviews with them and recommend components. They will look at EMC test traces and support them with filters or power supplies or an interconnect solution.
“We will go as deep as a customer wants to go with Technical Support and again, I think that's as good as anyone in the industry, if not industry leading.”
Wurth Electronics UK is a lead sponsor of the Design Engineering Expo component of Manufacturing & Engineering Week. You can find them at stand M34 in the Design Expo hall at the NEC from 8-9 June.