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Chipageddon: Electronics Supply Chain Challenges
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March 10, 2022 Blog

Authored ByChristopher Cain, Vice President and General Manager, Electronic Industrial Products – Keysight Technologies; Gooi Soon Chai, President of Order Fulfillment and Digital Operations, Electronic Industrial Products – Keysight Technologies and Shidah Ahmad, Vice President of Global Manufacturing and Supply Chain – Keysight Technologies

 

Christopher Cain

Global electronics demand has undergone unprecedented growth in the past year through a macro-economic rebound caused by the acceleration of digital transformation, instigated and sustained by the COVID-19 pandemic and fundamental shifts toward adopting renewable power and electric transportation. The lack of integrated circuits (ICs or “chips”) and other electronic materials to meet this demand has profoundly impacted the electronics supply chain, which some have termed “Chipageddon.”

Huge investments across the electronics supply chain are being made in response to this extraordinary level of electronics demand. Of course, a fundamental response is to increase electronics manufacturing capacity, which is hampered by the time and expense required to build a manufacturing plant or IC “fab.”

Many electronic manufacturers have established a plan to increase the manufacturing capacity of electronics test and measurement solutions, including Keysight. These efforts include improving resilient operations, supplier collaboration, strategic sourcing and value engineering.

  • Resilient operations ensure people can safely work, with vaccination programs exceeding 98% of the workforce and safe operational procedures. This includes accelerating the digital transformation of fulfillment, manufacturing, and logistics operations.
  • Strategic sourcing is about investing in alternate sources and deep supply-based analytics to squeeze every available part out of the worldwide supply.
  • Supplier collaboration escalates when shortages occur and deeply engaged supply chain partners help deliver more components and capabilities.
  • Value engineering involves redesigning components or assemblies to retain the existing design’s capability, while substituting the part in short supply with another available part. This is expensive and takes time to properly complete, so reengineering a component or assembly is only applied in the most needful situations.

The COVID-19 pandemic has not only accelerated business and personal digital transformation, but the electronics supply chain and manufacturing digital transformation as well. This ranges from Artificial Intelligence algorithms used to predict component availability to software predicting upcoming manufacturing issues. before tests begin failing to enable actions to be taken before future failures stop the line.  Predictive insights are provided by advanced software, such as Keysight Technologies’ PathWave Manufacturing Analytics platform.

Community Response

Like everyone in the global electronics business, Keysight Technologies faces the challenges of obtaining sufficient material to assemble our test and & measurement solutions used in electronics manufacturing.  We utilise our four-element plan to address these challenges, but sometimes that is not enough to meet near-term critical demands.

We recently encountered challenges obtaining a modular power assembly in one of Keysight’s most complex manufacturing test solutions.  We ensured resilient operations amid the pandemic, applied all efforts towards strategic sourcing and supplier collaboration.  We even invested value engineering towards alternative designs, but these efforts were still not converging in time to avoid impacting shipment timeframes needed by our customers.

Gooi Soon Chai

We noted that customers might have units in local repair stocking or underutilised in active use systems.  Our systems are expandable so that a system might have up to four of these assemblies, and the system’s current usage might not be using all four installed modular power assemblies.

These modular power assemblies can be replaced after the solution is installed in case of rare assembly failure during operations.  We keep a few units in global stocking, and some were redeployed, but that couldn’t meet the high demand of newly manufactured systems.  How could we obtain more modular power assemblies to satisfy the near-term need to increase our customer’s manufacturing capacity?

We began a program to help our customers discover underutilised modular power assemblies so that they could be redeployed to a newly manufactured system they had on order.  To save additional time, we typically arrange for the new system to ship without these modular power assemblies and install them upon delivery of the system.

“The COVID-19 pandemic has not only accelerated business and personal digital transformation, but the electronics supply chain and manufacturing digital transformation as well. This ranges from Artificial Intelligence algorithms used to predict component availability to software predicting upcoming manufacturing issues. before tests begin failing to enable actions to be taken before future failures stop the line.” 

We’ve had several cases where we have been able to ship a new system by postponing the final integration of a critical component available through a nonstandard supply chain.  Similar strategies are being used in other complex products, such as automobiles.  We have a few cases where Customer A provided modular power assemblies to help Customer B, an extraordinary display of the electronics community stepping up to help each other in times of a crisis.

Customer Reengineering

Shidah Ahmad

At Keysight, we have leveraged our fourth supply chain response of value engineering towards helping our customers reengineer solutions they already have for higher productivity.   We assigned our most skilled innovators in product design (R&D) to work with our solutions engineers in sales to assist customers in identifying opportunities for upgrades to existing solution capabilities.  They have developed new digital tools that help determine which existing hardware and software upgrades might have the best ROI to improve productivity.   We are also benefitting from new insights gained by working intensely with customers, which is already impacting our next generation of new products in development.

An example of this was the discovery at one customer that their systems would benefit from upgrading measurement components to enable faster and more parallel measurements.  This could be accomplished sooner than supplying all new plans to expand manufacturing capacity.  In fact, in this case, we are providing our latest digital analytics platform to enhance productivity even further.   Another example of digital transformation accelerated.

By focusing on the customer outcome of increasing manufacturing capacity, we could select from a more comprehensive set of capabilities, some of which had fewer current supply chain impacts and thus could be provided more quickly.

Conclusion

The power of digital technologies and human innovation is impressive, mainly when applied in a crisis. When we facilitate a community response, solutions happen faster, more efficiently and everyone involved contributes. This has helped transform escalations into partnerships for mutual success. Don’t forget that our customers are our neighbors as well!

“By focusing on the customer outcome of increasing manufacturing capacity, we could select from a more comprehensive set of capabilities, some of which had fewer current supply chain impacts and thus could be provided more quickly.”

Formulating a response to the global supply chain challenges can also be reapplied to your customer outcomes when your products and solutions are part of that supply chain. This algorithm is called recursion in software and is one of the most powerful algorithms available. Re-engineering your customer outcomes, especially by leveraging digital technologies, is an excellent source of innovation and accelerated value creation.

Ensuring the success of our neighbours is an enduring value, and in times of crisis, we must remember to be flexible and innovative in how we deliver that success.

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