Building up expertise after experiencing the COVID-19 crisis
Purchasing materials earlier than necessary
Promotion of localization due to difficulties in overseas procurement

Supply chain management has emerged as a key business topic in the parts industry, which marks its third year of COVID-19. Recently, the supply shortage of parts has eased a bit. Accumulating practical knowledge and expertise in the past 1-2 years has greatly reduced the risk of supply chain management (SCM).

According to the industry on the 27th, supply chain management efficiency has been maximized through diversification of supply chains and expansion of purchase management organizations across the domestic parts industry.

First of all, changes are detected in parts or material purchase patterns. It has become common practice to double and triple check the procurement of parts and materials. They have also made considerable improvements in the timing of purchases.

Company A, which develops advanced battery materials, has strengthened its management system for suppliers since last year. This is because the supply and demand of materials has become important enough to determine whether the business succeeds or fails. It has established a comprehensive response procedure by securing a list of companies that can be replaced in the event of a problem with its partners.

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Company A's CEO said, "In the past, we only managed or checked the schedule of companies that received materials, but since the COVID-19 incident, we have created a dual management system for suppliers," further adding, "If supply chain management collapses, we have prepared our own measures to block the business itself."

There are many instances of operating a pre-purchase system. This simply means they purchase parts or materials earlier than when they are needed. In particular, items that have unresolved supply difficulties, such as application processors (APs), have been purchased a year ago.

There have also been several noteworthy attempts to localize parts procurement. Due to COVID-19 shutdowns in China and Japan, there have been attempts to procure core parts and materials domestically.
Company B, which produces key components for camera modules, have seen significant benefits as many companies pushed for localization due to COVID-19. According to Company C's CEO, "As large companies that formerly relied on U.S. parts experienced supply and logistics disruptions in the wake of COVID-19, they began to pay attention to domestic companies that can easily and quickly manage after-sales (AS)."

Organizational changes are also being considered. As supply chain management became more important, companies increased the workforce in related organizations. Some places doubled the number of supply chain management personnel or upgraded their organizations.

An official from Company C, a camera module company, said, "The importance of purchasing organizations is definitely becoming more prominent than before."

Such efforts to manage the supply chain are bound to entail costs, which raise concerns. Critics point out that the burden is also formidable when materials purchased in advance remain in stock due to changes in market conditions.

An industry official said, "For small and medium-sized companies, where manpower input and investment are bound to be limited, supply chain management can be a burden."
 
By Staff Reporter So-ra Park (srpark@etnews.com)