Why line downs within the electronic industry are no longer an exception

Rutronik Elektronische Bauelemente GmbH is one of the biggest electronics distributors in Europe. With 82 offices in three continents, the company has transformed since its founding in 1973 into a global player. For over 30,000 customers, Rutronik fulfills a single promise every day: Everything we do is done with the highest quality and the best service.

The German company has one of the broadest line cards in the industry, including semiconductors, passives, e-mechanics and embedded products. As a leading player, Rutronik works hard to ensure production is efficient and smooth. Electronics aren't an off-the-shelf product which is why it's a collective responsibility to make the process a success.

With electronics nearly everywhere these days, it's hard to think of running a business without them. The market has enjoyed continuous growth over the last few years and even during the worst of the COVID-19 pandemic when many industries were struggling, the demand for electronic components continued to grow, achieving an all-time high in 2021.

Even during the worst of the COVID-19 pandemic when many industries were struggling, the demand for electronic components continued to grow, achieving an all-time high in 2021.

Production challenges

Driven by new technologies, such as 5G, e-mobility or computer applications, it is becoming increasingly difficult to meet global needs. While suppliers around the world try to expand their production capabilities, they lack the necessary speed to introduce new production lines that will fulfill current demands.

Many companies are still planning last-minute deliveries and forwarding the responsibility for their production schedules to be successful to their supply chain. For electronics, this has become a very risky set-up. Lead times of a year or more are becoming a regular occurrence. In Asia, there are companies that have a greater purchasing power than Europe as a whole so even the largest electronic industries such as the automotive sector, struggle to keep production running.

If there are 100 parts on a PCB and only one chip or resistor is missing, the entire production goes into a line down. For a long time, distributors around the world were able to buffer components for their customers to cover shortages. However, suppliers now have to allocate their output carefully which is why distributors only receive concrete customer demands and have very little opportunity to build up buffer stock.

Enjoying very close relationships with customers and suppliers is extremely important and is the necessary foundation to avoid line downs.

When it comes to the fair allocation of components within a customer base, Rutronik is one of the best partners to have. Enjoying very close relationships with customers and suppliers is extremely important and is the necessary foundation to avoid line downs. Long-term planning between Rutronik and its customers helps to secure upcoming demands and Rutronik appreciates that in these strategy conversations, it is important to include all parties, from the engineering side up to the contract manufacturing service.

Rutronik's strong relationships

As early as the selection stage of an electronic component, it is crucial to involve the distributor. Even if the technical aspects might fit the application, it is only a distributor such as Rutronik who can inform the R&D departments about long-term availability compared to similar alternatives.

Once a selection has been made, Rutronik informs the supplier about potential forecasts, even if the scheduled production start is still years ahead. Lead time jumps of more than 20 weeks are noted on a regular basis within the industry. By working closely with suppliers, Rutronik has the chance to inform the contract manufacturer in good time of these jumps so their needs can be met.

The broad line card gives Rutronik flexibility to offer secondary sources in order to reduce the risk of a supply shortage. Working closely with a distributor is a great advantage, not just in terms of deliverables but also for solid pricing. The industry also sees big fluctuations in pricing with confirmed prices adapted on a regular basis and while extra costs may occur, they don't necessarily help to obtain parts earlier. Raw materials, production capacities and deliveries to Europe are becoming more expensive and influence the price structure of nearly every electronic component.

To stay on top of a production schedule, companies need to have a trustworthy partner that can consistently and reliably manage changes as they happen. Rutronik fills this role by helping find solutions to challenges and meeting the ever-changing demands of the huge and varied electronics industry across the globe.