During the COVID-related procurement bottlenecks, many companies placed large orders for components and increased their inventory levels. These excess inventories are currently being depleted amidst the weakening economy, leading to a decline in demand for LCDs, among other components. Manufacturers are responding by reducing their production capacities accordingly.
While lead times and prices significantly decreased a few months ago, both metrics have now stabilized or are even rising again. Demand is picking up again in certain regions or industries.
For some time now, there has been speculation about the possibility of a bullwhip effect. The demand peak during the Corona period is now followed by a sustained phase of inventory reduction. However, if many companies simultaneously face depleted inventories and then require goods at short notice, the effect could reverse like a whip, leading to a sudden surge in demand and procurement urgency.
We therefore advise: Plan your requirements long-term and place orders as early as possible.
Should a rebound indeed occur, manufacturers will require time to adjust their production to the increased volumes.
Contact us; we are happy to support you with long-term framework agreements, risk orders, or buffer stocks.
