It’s not always simple to create a sustainable supply chain for electronic components.
In fact, according to EY, only a small number of supply chain leaders have the right tools to meet their sustainability goals.
And for good reason.
This process and a good logistic parts management system requires balancing several important factors when securing the parts needed for a finished product – including cost, supply reliability, and compliance.
Before going deeper into this balancing act, let’s first define what a sustainable electronic component supply chain means.
In this context, it’s the ability to keep a high-performing supply chain while also being responsible to the environment and society’s needs.
So, how can you make it happen? Let’s explore.
Main Elements of a Sustainable Electronic Component Supply Chain
It may not be as simple as one, two, three – but there are three key features that make a sustainable electronic component supply chain possible:
Cost management, supply security, and compliance are the main drivers for achieving sustainability goals. Now that we have this foundation, let’s go into each of these in detail:
1. Cost Management
A strong supply chain must keep costs under control when sourcing components. To understand your product’s real cost potential, you need accurate component data and insight into how your processes compare to market standards.
Efficient processes and good component data lead to better cost outcomes. On the other hand, slow processes and poor data can cause mistakes in purchasing, damage supplier relationships, and increase both component prices and overhead costs.
To reduce costs for electronic components, procurement teams should be able to compare their prices at the component level with reliable market data and identify where they can improve.
One possible approach is using Spend Benchmarking – a system that draws from the largest independent database of millions of electronic components and their real-world prices. By securely uploading component spending data, companies get a cost competitiveness score and risk analysis that can help in supplier negotiations and building an optimal supplier base.
With Spend Benchmarking, procurement teams can:
- Find cost-saving opportunities (e.g., paying more than the market average for certain components).
- Spot unnecessary risks (e.g., using single-source components or parts that are near end-of-life).
- Reduce risks in the bill of materials by finding alternative components.
Investing in these kinds of tools allows procurement teams to use trusted market insights to find savings and identify which processes are working and which need improvement.
2. Security of Supply
Security of supply is another key factor in a sustainable supply chain. Without the right parts, products cannot be made or delivered. Several factors influence this, including:
Choosing the right manufacturers and components – For multi-source components, it’s best to have at least three independent sources that are not connected to the same parent company or simply rebranded versions of the same supplier.
Maintaining high-quality component data – Poor data is a common problem, but companies with clean and accurate information gain an advantage. This means avoiding outdated details, fixing errors such as misspelled part numbers, and making sure records are consistent.
Managing global supply chain risks – Issues like political events, shipping problems, or pandemics can disrupt supply. Some steps to lower risks include using suppliers from different regions, asking suppliers to keep safety stock, checking suppliers’ continuity plans, monitoring price and availability trends, and preparing for possible disruptions through simulations.
Clean, accurate, and regularly updated data is essential for all these steps.
Tools like Lytica can help by:
- Identifying single-source components that could cause shortages.
- Finding suppliers at risk of stopping production.
- Suggesting alternative parts to increase supplier diversity.
Data plays a central role in securing the supply of electronic components. Using technology to manage this data can improve procurement processes, make supply chains more sustainable, and reduce the impact of disruptions.
3. Compliance
In today’s business environment, compliance is more important than ever – and supply chains are no exception.
For a sustainable electronic supply chain, you need to follow industry rules, from product design standards to cybersecurity requirements and government regulations.
At the component level, parts should meet product and market requirements, have the right certifications, and support environmental and social sustainability claims. Manufacturers should work with suppliers who have proven they meet these standards.
Focusing on compliance helps create a more sustainable global electronics supply chain by reducing delays, improving supplier relationships, and ensuring final products meet industry standards.
Using Market Insights to Build a Sustainable Supply Chain
Building a sustainable supply chain for electronic components means balancing cost, supply security, and compliance. Reliable market data is one of the most important tools for improving each of these areas.