What are some of the major challenges and trends that have been impacting the electronics manufacturing industry?
The most significant challenges have been the constrained inventories and factory capacities of component parts within supply chains. There has been ebb and flow with demand amiss of a rhythm or predictability. This causes chaos with lead times shifts to both left and right, but primarily to the right with time-line extensions to receipt of parts. The positive news with all of this is the market has seen a softening over the last two quarters resulting with a normalization with the S&D. However, this normalizing is short term and expected to end in early 2020 with increased upside activity in the IoT and mobile businesses. Mobile attributed mainly to the 5G roll out. Couple this dynamic with an upside ramp in demand for higher technology requirements in the automotive sector and we will likely see a repeat of 2017 as factories will once again, not be able to stay ahead of pent up demand. For Crestron, the effect will result in our team pulling in current orders and building up our inventory levels of these components. We know that any unclaimed inventory will be re-allocated to other OEMs and our scheduled orders will be shuffled down in the queue. We are forced to work closely with the specific component commodity managers to ensure they are providing the proper level of support to their OEM partnerships, Crestron being one of them.
The other challenging area is a high amount of part obsolescence activity due to the M&A activity within the semi-conductor industry. We are only seeing a quarter of the acquisitions activity we did two years prior but the latent effects from 24 months ago are with these paired-up companies now trimming their portfolios of competing lines or of specific parts that are not as profitable (which signifies lost opportunity margins) as they struggle with finding capacity within their factories.
Can you tell us about the latest project that you have been working on and what are some of the technological and process elements that you leveraged to make the project successful?
There are many unique identifiers on products today that have always been managed with the operations. Electronic IDs that were once only relegated to the likes of MAC addresses and RFIDs have evolved to managing copy protection IDs for digital content and certificates for cloud content and connectivity. The challenge we face is to ensure we retain a delivery method and reliable control points for these IDs due to a shift for these identifiers to be created and managed within the framework of the OEMs infrastructure through servers and cloudbased tools.