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Jabil's Global Commodity Intelligence Archive
Q4 2021
Jabil's Global Commodity Intelligence Archive
Q4 2021
Executive Summary
Q4 2021
Welcome to the Q4 2021 Jabil Procurement Intelligence Report. As we have presented in the previous reports, the market is extremely tight with extended lead times, price increases and continued market consolidation in many commodities. In almost every covered commodity, we see the market and current constrained environment continuing through Q2 2022, and in some product lines, such as complex semiconductors, the market remains tight through all of 2022.
With headwinds from raw materials including copper, resins, palladium and others, suppliers are now passing increased pricing to their customers. In addition, freight and logistics costs continue to rise, based on drastically reduced capacity for air freight and the inherent inaccuracies from ocean freight compounded by backups at most large international ports. Extended lead times and regular price increases are becoming common place across many of the passive components, to match what we are experiencing in the semiconductor commodities.
With capacity constraints driving extended lead times and price increases becoming the norm for the next few quarters, the following are some recommendations to help mitigate supply chain risk and minimize component price increases.
- Alignment - make sure the design teams continue to stay aligned with your supplier’s technology roadmaps and capital investment plans.
- Supplier qualification - wherever possible, qualify multiple suppliers for common products, continually reviewing new suppliers as they expand their product portfolios and capabilities. In addition, as part of the qualification process reviews, monitor suppliers’ global footprints to mitigate concentration from any one country or region.
- Visibility - provide as much visibility as possible to your supplier partners. This way, they can plan their product capacity and any potential longer term capital investments. Some suppliers are looking for 12-24 months of visibility.
- Increased lead times in planning systems and additional buffered inventories – with lead times moving out across most commodities, update your planning systems to reflect the new lead times immediately, as pull-ins and support for unscheduled orders will be very difficult.
The Covid pandemic continues to be a disrupting factor affecting supply chains and supplier’s production capacity as many companies deal with the spread of infection and are mandated to reduce work forces and enforce various country and government protocols.
The Jabil team is continuing to monitor all our commodities and work very closely with the supply base across the globe. We forecast this challenging environment will last well into the second half of 2022, so we all need to plan and react accordingly.
Please feel free to reach out directly if you have any questions or need additional information.
Graham Scott
Vice President, Global Procurement
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