Series 10 – Episode 3 – The evolving status of the supply chain
Paige West speaks with Paul Romano, Chief Operating Officer at Fusion Worldwide about the supply chain and strategies for addressing current challenges.
Fusion Worldwide is one of the world’s largest open market distributors of electronic components and electronic products. It provides products to some of the world’s largest OEMs and EMS providers, and it has a global sourcing network.
Romano has been with the company since its founding in 2001.
Manufacturers are facing a lot of supply chain challenges at the moment. “We’ve come through a period of extreme shortage. There has been some easing in that we’ve seen easing in the consumer sector and some of the other sectors. However, there are still some major issues in key verticals like automotive and industrial.
“We expect these problems to continue through Q2/Q3 of 2023.”
Recent supply chain trends are also pushing manufacturers to amass unnecessarily large inventories. But this can backfire, creating instability and fostering inflation.
“What happens in a shortage is what we call a bunker mentality – the builders go out and buy as much as they can because they obviously want to have products to build at their end. But that becomes a major issue because at some point, it’s like musical chairs, everybody’s got to sit down and somebody’s not standing up. There’s going to be excess inventory.”
The major semiconductor shortage of the past few years has triggered a massive surge in companies turning to open market distributors to secure chips. Open market distributors rely on a small network of testing houses for quality checks, and one unfortunate consequence has been a testing wait-time bottleneck stretching to 2+ months.
“We were doing everything we could to shorten those lead times – we were paying for weekend and night work. But that wasn’t working because everybody else was doing it as well. So, the best solution for us and for our customers was for us to actually acquire our own test house.”
Romano goes on to talk about what impact the Russian-Ukraine conflict had on global supply chains and how crypto introduces volatility into the semiconductor market.