Impact of coronavirus on distributors of electronic components

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Special Report: Impact of coronavirus on distributors of electronic components

There has been great media coverage all around the world on the coronavirus (COVID-19). The spectrum of information varies from raw numbers to crude conspiracy theories. So before diving into an analysis of the impact of coronavirus on distributors of electronic components, we’ll provide a short update.

The current coronavirus situation (July 27, 2020)

Factsheet from the  World Health Organization (WHO) Report (March 17, 2020):

  • Origin: Wuhan city in Hubei province, mainland China
  • Infected: 16,114,449 globally
  • Death toll: 646,641

Mortality of coronavirus has surpassed the confirmed death of the last greater epidemic, SARS. The SARS virus killed 773 people from 2002 until 2003. It is estimated to have cost the global economy about 40 bn. US-Dollars. It is undeniable, that corona virus will have a huge influence on economic growth figures all around the world. Corona is expected to be much more expensive than SARS, affecting every industry branch.impact of coronavirus on distributors of electronic components

Photo by Tom Fisk from Pexels

Impact on the electronics industry

The electronics industry is not making an exception here. In the last week nearly every manufacturer has given out statements, on how the corona virus and the partial lockdown of China’s cities and infrastructure is affecting lead times. In addition, many companies have declined their participation in important trade fairs, such as Embedded World. Organizers of the Mobile World Congress in Barcelona even cancelled the event completely.

How are distributors of electronic components prepared?

Distribution companies have an important role in the electronics industry. They provide certainty on component availability to a great number of manufacturing industries globally. That’s why we asked two key players on the impact of coronavirus on distributors of electronic components. And what they have learned from SARS outbreak 18 years ago.

We’d like to thank Teri Ivaniszyn, Digi-Key Electronics Vice President, Operational Excellence.

And Geoff Breed, Vice President Marketing – Europe, TTI, Inc. for answering our questions.

impact of coronavirus on distributors of electronic components

1. What were your first steps in communication regarding this issue?

Geoff Breed, TTI Inc.:

“TTI strives to provide the most up-to-date information and communication on such serious and critical topics. We have prepared a full and live update on our global websites, so that customers have a centralized and consistent resource for information.  We are continually working closely with all our suppliers to understand and communicate the actual situation and any consequential effects that it might bring on.”

Teri Ivaniszyn, Digi-Key:

“The health and safety of our team members, customers and business partners is of primary importance. We fully support any workplace accommodations that reduce potential risk and encourage compliance with government guidelines dealing with the issue. […]

  • We are proactively communicating with our supplier partners to gauge the impact for them.
  • ECIA (Electronic Component Industry Association) has provided us insights and analysis on the topic to monitor the situation.
  • We have relationships with multiple logistics carriers and will utilize all of them to best serve our customers.
  • Carrier partners such as UPS, FedEx, DHL and Maersk are working to mitigate impact on customer’s cargo plans.”

2. To what extent is your line card affected by the virus outbreak and the restrictions by Chinese government?

Geoff Breed, TTI Inc.:

“It is still too early to say. We know that suppliers who have manufacturing in the area have delayed resuming production and return of staff for another week after the Chinese New Year. Beyond that, we are working on a daily basis with our supplier partners to understand any further restrictions.”

Teri Ivaniszyn, Digi-Key:

“We anticipate minimal impact to our line card and may in fact see increased demand for safety related products and devices.”

3. The last mentionable virus outbreak was in 2002/2003 with the SARS virus. How did this affect your supply chain then, and what measures did you implement to conquer future comparable disaster, such as corona virus now?

Geoff Breed, TTI Inc.:

“Of course, it is very difficult to be completely prepared for any such issue, as they are relatively infrequent. SARS was 17 years ago, and the face of our industry has changed dramatically in this period.

At TTI we always look ahead and try to minimize issues of any kind by keeping the widest and deepest inventories in the market. We also forecast well ahead with our supplier partners to make sure the pipeline is in place. Our world class inventory management systems ensure that “if” supply chain issues deepen, we protect our customers to the fullest.”

Teri Ivaniszyn, Digi-Key:

“The depth of product Digi-Key carries minimizes the effect for our customers. Industry research and analysis have predicted the possibility of short-term slowdowns in automotive, airlines, travel and entertainment. But if history repeats itself as with the 2003 SARS crisis, a single-quarter decline in China’s GDP growth was largely offset by higher growth in the subsequent two quarters.

ECIA research also points out:

  • China is now in the internet commerce age, with consumers increasingly shopping more online. […]
  • During SARS and other prior outbreaks, the markets have typically proved resilient.
  • Analysts found that among companies they covered none suffered long-term effects from the 2003 SARS outbreak.”