Smart Manufacturing 04/28/2023

5 Trends Defining the Electronics Industry in 2023

5 Trends Defining the Electronics Industry in 2023

2022 saw global changes with Ukraine-Russia conflict, COVID-19 pandemic, rising costs of living, and inflationary pressures, causing uncertainty for the future. The Electronics manufacturing industry must plan accordingly in 2023, taking these challenges into account. This article defines 5 trends for electronics manufacturers to consider.

1.    Inflation's Impact on Electronics Production: What Manufacturers Need to Know

The IPC's June 2022 Global Sentiment of the Electronics Supply Chain report has revealed that 86% of electronics manufacturers are worried about inflation, with rising material and labor costs being major concerns. To stay competitive, manufacturers have raised prices on electronic goods. However, they can maintain their competitiveness by focusing on controllable improvements, such as optimizing internal processes, maximizing existing assets, and increasing overall efficiency. Digitalization is a crucial tool to achieve these goals, enabling manufacturers to manage their assets and inventory effectively. The trend towards high-mix, low-volume manufacturing has accelerated due to changing market demands and consumer preferences.

2.    Manufacturing Trend: High-Mix, Low-Volume Production for Changing Market Demands

Rising inflation has led to caution and smaller orders in many end markets, making it difficult for manufacturers to maintain efficiency. Optimizing the New Product Introduction (NPI) process is crucial in high-mix production, but it can be time-consuming without digitalized solutions. Combining these solutions with planning and scheduling tools can improve efficiency. To stay competitive, manufacturers must adapt to the trend of high-mix, low-volume manufacturing and adopt agile production strategies.

3.    The Impact of Shifting Away from China on Component Shortages in Global Supply Chains

During 2022, China's struggle with COVID-19 outbreaks and "Zero COVID" policy prompted companies to move their manufacturing out of the country. Although some companies plan to diversify their supply networks and move production to other countries like India, it will take time. Therefore, companies should plan for continued component shortages and implement solutions to optimize the use of materials and reduce costly material obsolescence by providing full visibility of materials in the warehouse and on the shop floor.

4.    Reshoring boosts electronics competitiveness and supply chain

Reshoring provides multiple advantages that are crucial for successful manufacturing, especially in light of recent events, such as the Zero Covid policy, rising wages in China, and increased shipping costs, that have highlighted the importance of a resilient supply chain. In addition to improving supply chain resilience, reshoring also results in enhanced quality control, shorter delivery times, reduced shipping costs, and improved communication between manufacturers and suppliers. All of these benefits are equally significant and contribute to making manufacturing more efficient and competitive. 

5.    Demand for sustainable electronics
Manufacturers are under pressure to adopt sustainable practices due to rising demand for environmentally friendly and socially responsible manufacturing. Digitalization and manufacturing analytics can help identify and reduce excess material and energy usage, such as by using reflow ovens at lower temperatures. The electronics industry can play a role in reducing greenhouse gas emissions and creating a more sustainable future.

In conclusion, the electronics industry is facing significant challenges in 2023, including inflationary pressures, supply chain disruptions, and the need for sustainability. However, by embracing digitalization, high-mix, low-volume production, and reshoring, manufacturers can adapt to changing market demands and remain competitive. Additionally, companies must prioritize sustainable practices to meet rising demand for environmentally and socially responsible manufacturing. By implementing these trends and strategies, the electronics industry can navigate the uncertainties of the future and pave the way for a more sustainable and efficient future.

Source: Siemens Digital Industries Software