For decades, manufacturers in the USA have been offshoring their component fabrication operations to places where labor expenses are less and fewer regulations can add to their costs. In 2020, manufacturers across the country got a wake-up call. When the COVID pandemic swept across the globe, it interrupted supply chains worldwide, wreaking havoc on American industries that depend on overseas sources for their supply of electronic components. Electronic components distributors in the USA went through considerable hardship trying to obtain what various industries needed to remain operational. The pandemic negatively affected any company that utilized off-shored electronics in its products, including makers of automobiles, computers, home appliances, televisions, and smartphones.
This and other global events continued to affect logistics worldwide, causing many electronic components to become scarce and, thus, more expensive. To protect against future supply chain interruptions, any business utilizing electronics should think carefully about offshoring and perhaps even consider sourcing critical electronic parts from domestic sources.
On-shore vs. Off-shore Manufacturing of Electronic Components
On-shoring refers to companies sourcing electronic parts from within a country’s domestic borders. Its benefits include simplifying logistics, lowering shipping costs, eliminating import duties, and speeding up the delivery of electronic components. Distributors in the USA can also credibly claim that on-shore electronic parts are “Made in the USA” to sell their products.
Arguments can and are still made for offshoring by many electronic component distributors. Higher wages and low unemployment in the USA can cause delays at factories in tight labor markets. Some manufacturers have since looked at offshoring in other countries besides China, but that doesn’t resolve the problem of lengthy supply chains that can be easily disrupted by the world or even local events.
Its disadvantages often outweigh the advantages of offshoring. COVID proved that longer supply chains are fragile, whereas shipping within the USA exhibited fewer problems and had much less impact on manufacturers’ timetables. Another critical concern is the danger to intellectual property, which can lead to counterfeiting, a real problem for electronic parts sourced off-shore.
6 Reasons to Work with Electronic Components Distributors in the USA
There are many reasons for American companies to source their electronic components locally. Distributors in the USA can offer several benefits with which off-shored companies can’t compete. Below is a list of just a few reasons why sourcing domestically makes sense.
1. Improved Accessibility for Product Development
In the early stages of product development, design engineers must quickly make product enhancements or changes. Whether it’s a circuit board or a complete prototype using components sourced from a third party, utilizing a domestic source for parts reduces the time it takes to get a new product to market. By engaging an electronic components distributor in the USA rather than offshoring such production, companies no longer need to engage in time-consuming and costly international travel or deal with the difficulties of long-distance communications.
2. Better Quality Control
Though many off-shore manufacturers produce superior-quality electronic parts, this isn’t true for every overseas supplier. Often, cutting costs compromises quality, with some manufacturers using lower-quality materials or less skilled employees to produce their electronic components. Distributors in the USA are held to higher standards and can more easily be held legally liable should a catastrophic failure due to a poor-quality component. Design engineers can also better vet domestic electronics distributors.
3. More Reliable Communications & Customer Service
Time differences and language barriers can delay projects that require collaboration and frequent communication between an electronic parts supplier and manufacturer. Domestic production doesn’t have these problems, decreasing the chance of miscommunication that can result in severe production errors. This also applies to an off-shore distributor’s customer service representatives, where language and cultural barriers can create inefficiencies. Interacting with those who speak the same language and understand American business culture is more accessible.
4. Lowers the Chance of Counterfeited Components
US companies sourcing from overseas often have no real recourse should they receive counterfeited electronic parts from a supplier. Looser laws about patents and privacy create situations in which the chance of receiving a component that isn’t genuine is much higher from an off-shore partner than from a domestic supplier. Further, as with quality control, it’s easier for a company’s design engineers to vet domestic manufacturers and distributors of electronic components to ensure they’re of the highest quality.
5. Less Need to Stock Surplus Inventory
Because of potential supply chain issues, companies that utilize off-shore suppliers often must stockpile electronic components. Distributors in the USA are more flexible, often allowing their customers to make smaller purchases while their delivery times are much quicker. Domestic electronic parts suppliers allow the businesses they distribute to keep their inventories low, making them nimbler and improving cash flow.
6. Simpler Logistics
The complexity of the global supply chain is now one of the biggest concerns for companies that rely on offshoring. But with high import duties and astronomical shipping costs becoming more commonplace, the economics of outsourcing to overseas suppliers is being increasingly questioned. Domestic distribution doesn’t have this problem and, in some cases, may even be cheaper for many businesses in the long run.
Reshoring to Electronic Components Distributors in the USA
For manufacturers considering reshoring their sources of electronic components to distributors in the USA, it’s becoming an increasingly viable option. Along with having more direct access to the technological infrastructure and better protections on patents the USA provides, onshoring considerably shortens supply chains and helps truncate production timetables. Businesses are assured of higher quality components and finished products by sourcing components produced and distributed domestically.
Take advantage of the benefits of electronics distributors in the USA with Solid State Inc. As an experienced US-based electronics distributor, we can help you source the needed parts. Request a quote from Solid State today for new and genuine electronic components.