Phil Simmonds, Chief Executive Officer of EC Electronics
Pandemic-related factory closures, national lockdowns, fluctuating demand and labour shortages have wreaked havoc on supply chains and lead times across various industries — particularly those which rely on supply from China and the Far East, where the impact of the virus was first felt.
And COVID-19 is not the only thing that has rocked global supply chains. Accelerating climate change has increased the frequency of extreme weather events that threaten to disrupt already fragile interdependent shipping networks. Plus, Brexit legislation came into force on 31 January 2021, prompting the mass exodus of EU workers and causing further bottlenecks at borders as companies navigate additional requirements.
Experts predict that the consequences of recent events will continue to impact global supply chains into 2022. Still, so long as the COVID-19 pandemic does not worsen significantly, things should start looking up…
An end in sight for the semiconductor shortage
The recent chip shortage — triggered by COVID-19 and increased demand for electronics — has caused problems for several industries, especially consumer electronics and automotive manufacturers.
According to the Semiconductor Industry Association, chip sales were up by 26.2% in May 2021 compared to the previous year, as more organisations underwent digital transformations and businesses and consumers invested in technology to facilitate remote working.
However, the majority of chip production happens in Taiwan, China and South Korea. As coronavirus first gained a foothold in East Asia, the pandemic has caused ongoing delays in chip production, significantly increasing lead times for suppliers and end-consumers.
Although it may be some time before we begin to see significant improvements in the semiconductor shortage, organisations and governments are planning to boost chip manufacturing capacity regionally and globally to help manufacturers meet growing demands.
Taiwanese semiconductor giant TSMC is investing $100 million (around £72.5 million) in additional capacity to address the chip shortage over the next three years. And the European Commission announced plans to introduce a ‘European Chips Act’ as part of efforts to improve ‘tech sovereignty’ in the region earlier this year.
Price hikes will begin to soften
The cost of materials, components, labour and transportation have continued to rise with inflation and the demand for electronics throughout 2021.
Due to unprecedented competition for containers and reduced capacity, freight prices have spiked, further compounding price hikes along the supply chain. Plus, businesses face the additional administrative costs of Brexit paperwork and logistics — all while managing the labour shortages affecting almost every sector.
Hapag-Lloyd AG, a German international shipping and container transportation agency, placed a record order of 75,000 shipping containers to help ease shipping congestion, and Chinese container factories are working flat out to keep up with demand.
Still, prices are not likely to come back down until 2022. However, there are hopes that the incline in shipping rates will slow during the post-pandemic period. Factories will begin to ramp up their output, more materials will be extracted, and transportation backlogs will ease and shorten lead times.
Shortages and disruptions also revealed the flaws in western nations’ dependence on resources from China and other eastern distributors for supply chain security. As such, governments and organisations are strengthening local manufacturing and infrastructure to support supply chains in the modern world.
In the UK, for example, a brand new ‘gigafactory’ is set to bolster local production of electric car batteries, and the government has also announced £53 million funding to promote digital tech in the region. And in the EU, the European Investment Bank (EIB) signed a $350 million loan agreement in 2020 to support a new gigafactory in Europe. Northvolt Ett is located in Sweden and will harness clean energy to produce lithium-ion battery cells with an 80% lower carbon footprint than those made using traditional methods.
Mitigating threats to supply chain security
Electronics manufacturers depend on global shipping and transport networks for essential materials and components. So, preparing to weather the upcoming supply chain crunch has become a crucial consideration for every business.
Encouraging sustainable manufacturing is a massive part of this. Natural resources are in finite supply, and ever-increasing human activity worldwide is only making the situation worse. Manufacturers must refocus on sustainability to align with net-zero targets, which will, in turn, have a positive impact on supply chains.
Many OEMs and EMS are taking steps to improve sustainability, including becoming more energy-efficient, reducing waste, embracing digitisation and automation and optimising supply chains — all of which reduce costs and diminish carbon footprints.
Labour shortages are also causing problems across most sectors, as businesses experience the knock-on effect of coronavirus outbreaks and Brexit regulations. So, the electronics manufacturing sector must encourage training and education within organisations to help address the skills shortage by introducing courses such as IPC’s ‘Electronics Assembly for Engineers’ to tackle skills gaps within the industry.
Reinforcing every element of supply chain management will be crucial to guarantee the industry can keep pace with the growing demand for electronics as manufacturers, suppliers and customers transition away from survival mode and prepare for long-term growth.
What Every Small Business Should Do
The majority of the difficulties associated with establishing a business stem from failing to accomplish the small things correctly. The basics will lead you to the top, as any competent instructor has stated at some time.
If you’re thinking of starting a small business, make sure you follow these 10 small business rules:
1. You must keep track of your finances.
Lack of capital, is the leading cause of small business failure. You must undertake proper financial planning and fully comprehend the business levers that might affect your cash flow.
Do you purchase stock?
- What amount of cash should you have on hand?
- Do you have a system in place to collect money from clients?
- How long do you have to wait for them to pay you?
- Do you have any loans that you need to repay?
- Do you rely on suppliers whose prices fluctuate according to market conditions?
2. You must create a data-driven culture.
The better your business decisions are, the more data you can track and utilize to make them. Business often necessitates certain “intuition feel” judgments, but it’s preferable to provide your instincts with as much knowledge as possible.
Tracking your company’s key performance indicators (KPIs) and understanding why they rise or fall may help you make decisions that will help you develop and stay on track.
3. You must participate in Lean Planning.
Rather of creating a long-written document that you utilize once and then file away, it’s critical to create a strategic and financial plan and track it on a frequent basis.
Planning is a continuous tool that should be used to understand the assumptions you have about your business and whether or not those assumptions are valid, or whether you need to make changes and adapt your assumptions.
60 percent of small companies in America fail due to a lack of cash, not a lack of profits—by utilizing Lean Planning, you can rapidly determine if you have made any financial assumptions that will have a negative impact on your cash. Maybe you assumed you’d get paid every 30 days on the dot.
By engaging in ongoing planning and then tracking the actual results of your business against your plans, you can quickly determine if you are getting paid every 45 days, and if so, you can increase your credit line quickly and appropriately, keeping your business cash healthy—before you get into trouble.
4. You must have a strategy in place for attracting and keeping top employees.
We are continuously on the lookout for top talent in our industry, therefore we make it a point to follow talent in our region on a regular basis and design outstanding retention programs and rewards.
Take some time to consider your company’s culture and what you want it to be, and make sure that culture is factored into your recruiting selections. We utilize LinkedIn on a daily basis to follow and acquire talent.
5. Every day, you must listen online.
Even if you just operate from 9 a.m. to 5 p.m. Monday through Friday, your business is “always on.” Every company should set up internet alerts to monitor what their customers are saying about them, their rivals, and the market in general.
Google Alerts is a fantastic (and free) tool for “listening” to what’s going on online. Be the first to know when a consumer leaves a negative review or when someone praises your company online. Use these methods to remain ahead of the conversation and capitalize on it. You need to get a business phone number too.
6. You must engage in marketing that generates a return on investment.
Small companies frequently tell us that they have no idea what marketing is. What should they spend their money on? Is it effective? Is it better to promote on the radio or on the internet? Should they believe the Groupon or Comcast salesperson who tries to persuade them to distribute discounts to the general public or buy local TV ads? What is it that works?
What does not work?
Small company operators should begin in venues that are both free and simple to access. Begin by forming relationships with local companies and company owners. Find out what it is that they do that is effective. Find out how visitors find your website and where they come from by using Google Analytics and your website.
Customers should be questioned about how they learned about you. And if you do decide to promote, make sure you know how to track it. Make a unique offer and keep track of it. Only provide one type of service or product. Repeat your successful marketing efforts after learning what works and what doesn’t. If you won’t be able to measure the results, don’t invest the money.
8. You must communicate with your clients.
Every company should communicate with its clients as frequently as feasible. If you own a retail store, talk to your customers at least once a week (if not every day). Discover what they enjoy—and what they despise.
If you own an online business, send a brief survey to your consumers or ask a few survey questions after they check out. Make a call to them. People enjoy talking and being asked for their viewpoint. Negative feedback might be difficult to hear, but it’s important to hear it and understand how you can improve your business for your consumers.
9. You need to know your competitors.
Both your direct and indirect rivals must be known and understood. You should always be aware of your rivals’ activities, including what they are doing, how they promote, and how they price their products.
You may be the only one of your kind in your town or sector, but that doesn’t mean you don’t have indirect competition. In my town, a small do-it-yourself tie-dye store has no direct competition.
They do, however, provide activity-based events and compete with all of the other businesses who host birthday parties and group activities. They also compete with other tie-dye merchants at Saturday Fairs and Markets. Even if they don’t have direct competition, they need to know how to position themselves against all of their indirect competitors.
10. You must have a larger goal in mind: a mission.
People like to work for companies that are more than simply a money-making machine. That isn’t to say that you can’t set sales or profit targets; it only means that if your employees believe they are part of a larger purpose, they will work harder and be more loyal.
5 Ways That Businesses Can Get the Most Out of Their Digital Marketing
Everyone knows that the world of marketing has been changing for the last two or three decades. The days of traditional marketing through billboards, radio ads and television commercials are still around, but something new is taking the world by storm. Digital marketing is the way of the future and has proven to be more beneficial for businesses everywhere. It’s not that traditional, offline marketing is completely dead, but it is difficult for business owners to deny the power of digital marketing and what it can do for their businesses.
Because the world has changed so much, people have now moved online, so a business owner needs to learn how to market their products and services digitally. If they do not, there is a huge risk that they will not be around much longer. However, the problem is that most business owners do not understand digital marketing. To begin, most owners do not fully understand marketing altogether, and they go for hiring a marketing agency to do this for them. But now, when you add a digital aspect to this scenario, it makes it even more confusing to the owners. If a business owner starts with simply knowing what digital marketing can do for their business and how to get the most out of it, this is a great place to start.
- Utilize Email
If your business is not using email marketing yet, you should be. It is far from being dead, and many people are just beginning to tap into what it can actually do for their business. To make the most out of your digital marketing efforts, advertising your company through email is essential. It could very well be the foundation of your marketing online. Email is all about keeping the channel open to your customer who you might not have seen in a long time or being available to someone who is simply interested in what you have to offer. Send occasional, nurturing emails to your following and customers to keep the dream alive.
- Build a List
Next, you have to build a list. Many marketers and business owners will tell you that you must have a list in order to survive. Now, the list is nothing more than a collection of information from your customers that includes their names, numbers and email addresses. You need this valuable information so you can email them and get in touch with them when things are dry. To get the most out of digital marketing, you should always be gathering this information from them and storing it for future use. Gather this information by running online advertising to generate leads.
- Do More Videos
To be the absolute best at digital marketing, your business should be using more video. This is because research shows that consumers want to see videos above anything else online. They don’t want to see still images and text, but they want to see you rock it through the camera. The good news is that this isn’t hard to do with modern innovations. Use your smartphone to record simple videos of your business and use these clever videos as the creative part of your digital marketing to catch their eyes and stop them from scrolling. The other great thing is that you will feel more like a movie star for creating videos.
- Build a Following
Now, it’s also important to build your online following. These days, it’s all about how many people you have “following” you online. These people are your audience, which is one of your valuable assets online. Don’t think that these are just virtual people that offer you known value. They are actual people who follow your company because they might be interested in what you have. It’s important to always build your following online. Increase your page likes and your audience, and your products and services will practically sell themselves. YOu can run specific campaigns to increase your following.
- Learn How To Target
To get even more out of your digital marketing, learn how to target the right people. Remember, you are doing all of this online marketing in order to reach people in hopes that they will make a purchase with you. To do this, you have to put yourself in front of the right people, not just anyone. But be happy, because online marketing makes it easier to find your customers. Learn how to navigate with digital marketing to find your right audience, and this will also make you stronger as a whole in your company. You will know your customer’s pain points, what they need and what they’re saying.
If you put a bit more effort into your marketing effort by learning how to do it digitally, you can definitely increase your profit and get the most out of it. With the right strategies and a little education, you can make anything happen online.
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