In today’s interconnected world, Original Equipment Manufacturers (OEMs) face an unprecedented challenge: global component shortages. From semiconductors to passive electronic parts, supply chain disruptions have become a persistent hurdle, threatening production timelines, profitability, and customer satisfaction. Whether driven by geopolitical tensions, natural disasters, or surging demand, these shortages are not going away anytime soon. For OEMs, survival hinges on adaptability and proactive strategies. In this blog, we’ll explore the root causes of these shortages and share best practices to help OEMs navigate this complex landscape.
The Persistent Challenge of Component Shortages
The global electronics industry has been grappling with component shortages for years, with the situation intensifying since the onset of the COVID-19 pandemic. A 2010 article from LEDinside highlighted early signs of this issue, noting a shortage of semiconductors and electronic components due to booming demand in consumer electronics and limited production capacity. Fast forward to 2025, and the problem persists—albeit with new layers of complexity.
Take the semiconductor crisis as an example. According to TechRepublic’s “Global Chip Shortage Cheat Sheet,” the shortage that began in 2020 was fueled by a perfect storm: factory shutdowns, a surge in demand for remote work devices, and logistical bottlenecks. S&P Global Mobility’s recent analysis warns of another potential shortage on the horizon, driven by rising demand for electric vehicles (EVs) and artificial intelligence (AI) technologies, coupled with constrained raw material supplies like copper and lithium. Meanwhile, India’s push to bolster its electronics sector—offering recruitment incentives and talent development programs, as reported by Business Standard—signals a global race to secure supply chain resilience.
For OEMs, these shortages translate into extended lead times, higher costs, and production delays. But rather than waiting for stability, the most successful manufacturers are taking control. Here are some best practices to overcome global component shortages and keep your operations running smoothly.
Best Practices for OEMs
1. Diversify Your Supplier Network
Relying on a single supplier or region is a recipe for disaster in today’s volatile market. OEMs should actively diversify their supplier base across multiple geographies and tiers. For instance, while Asia remains a manufacturing hub, India’s growing electronics talent pool and government incentives (Business Standard) make it an attractive alternative. Building relationships with Tier-1 and Tier-2 suppliers in different regions reduces the risk of localized disruptions, such as natural disasters or trade disputes.
Actionable Tip: Audit your current suppliers and identify potential partners in emerging markets. Establish long-term contracts to secure priority access during shortages, but maintain flexibility to pivot when needed.
2. Embrace Design Flexibility
Component availability often dictates production feasibility. OEMs can mitigate this by designing products with flexibility in mind. Cross-referencing alternative components—such as pin-to-pin replacements or drop-in substitutes—allows you to switch parts without costly redesigns. TechRepublic notes that some automakers rewrote vehicle software during the chip shortage to maximize available components, a strategy that can apply across industries.
Actionable Tip: Collaborate with your engineering team to create Bills of Materials (BOMs) with approved alternatives. Invest in modular designs that accommodate a range of components without compromising quality.
3. Build Strategic Inventory Buffers
The just-in-time (JIT) manufacturing model, while efficient, leaves little room for error during shortages. OEMs should shift toward strategic stockpiling of critical components, especially those with long lead times like semiconductors (S&P Global Mobility). This doesn’t mean hoarding—it’s about calculated buffers based on demand forecasts and supply chain risks.
Actionable Tip: Partner with distributors to create bonded inventory plans, storing essential parts in secure warehouses for on-demand delivery. Balance this with regular market analysis to avoid overstocking obsolete components.
4. Strengthen Supplier Relationships
Open communication with suppliers is key to navigating shortages. Sharing long-term demand forecasts gives suppliers visibility to plan production, while collaborative problem-solving can uncover alternative sourcing options. LEDinside’s 2010 report emphasized how early shortages forced manufacturers to work closer with suppliers—a lesson still relevant today.
Actionable Tip: Schedule regular check-ins with key suppliers to discuss market trends, lead times, and contingency plans. Consider joint investments in production capacity to secure your supply chain.
5. Leverage Technology and Data
Advanced analytics and supply chain software can predict shortages before they hit. By monitoring real-time data—such as component availability, geopolitical events, and shipping delays—OEMs can make informed decisions. S&P Global Mobility highlights how AI-driven demand is straining semiconductor supply, underscoring the need for predictive tools to stay ahead.
Actionable Tip: Invest in supply chain management platforms that offer obsolescence forecasting and inventory tracking. Use these insights to adjust procurement strategies proactively.
6. Explore Local and Regional Sourcing
Long global supply chains are vulnerable to disruptions, as seen during the pandemic (TechRepublic). Nearshoring or reshoring production to local or regional suppliers can reduce lead times and mitigate risks. India’s electronics talent push (Business Standard) is a prime example of how regional hubs are emerging to support OEMs.
Actionable Tip: Map out local suppliers capable of meeting your quality standards. Evaluate the cost-benefit of regional sourcing, factoring in reduced shipping delays and tariff risks.
7. Innovate Through Collaboration
No OEM is an island. Collaborating with industry peers, suppliers, and even competitors can unlock creative solutions. Joint ventures to secure raw materials—like automakers contracting lithium producers (S&P Global Mobility)—or shared R&D efforts can alleviate shortages and drive innovation.
Actionable Tip: Join industry consortia or trade groups to pool resources and knowledge. Explore co-development projects that address common supply chain bottlenecks.
Looking Ahead: Resilience is the New Normal
Global component shortages are no longer anomalies—they’re a fixture of modern manufacturing. For OEMs, the path forward lies in resilience: adapting to uncertainty, anticipating disruptions, and building agile supply chains. Whether it’s leveraging India’s growing electronics ecosystem (Business Standard), preparing for the next semiconductor crunch (S&P Global Mobility), or learning from past crises (LEDinside, TechRepublic), the strategies above offer a roadmap to thrive amid chaos.
The key takeaway? Waiting for the market to stabilize isn’t an option. By diversifying suppliers, embracing flexibility, and harnessing data, OEMs can turn shortages into opportunities. Start implementing these best practices today, and position your business to not just survive—but lead—in an unpredictable world.
Karkhana.io – One Stop Solution for EMS & Box Builds
At Karkhana.io, we’re proud to support this journey with flexible and scalable turnkey electronic manufacturing solutions designed to tackle these diverse challenges. With a 1,00,000 sq. ft. manufacturing shop floor, 7 SMT lines, and 5 through-hole lines, we offer end-to-end box build solutions—handling everything from component sourcing and PCB assembly to testing, validation, product integration, and logistics management. Our facilities, equipped with high-speed SMT machines, wave and robotic soldering, 3D AOI & X-ray inspection, and conformal coating capabilities, deliver high-quality PCB assemblies with 100% traceability and real-time statistical process control (SPC). Whether it’s high-density interconnect (HDI) PCBs, rigid-flex circuits, or hybrid SMT-THT assemblies, we empower businesses across automotive, industrial automation, IoT, consumer electronics, and more to scale production efficiently and effectively.
