> ERA Quick Connections — December 2023, Vol. 1
December 2023, Volume 1
MANUFACTURING DATA REPORTS
Manufacturing data reports from the Institute for Supply Management (ISM) are released at the beginning of every month and can be accessed at ISM. The latest report says economic activity in the manufacturing sector contracted in November for the 13th consecutive month after a 28-month period of growth.
The electrical equipment, appliances and components sector, as well as the computer and electronic products sector, reported contraction in November. Read the full report.
INDUSTRY NEWS
> Creating an image with generative AI uses as much energy as fully charging a smart phone, according to a new research study. Read more.
> The global semiconductor market is expected to reach $520 billion in 2023, reports ESIA, and is expected to rebound in 2024 to reach $588 billion. Read more.
> The White House announced 30 actions to bolster supply chains at the first meeting of President Biden’s supply chain resilience council last week. Read more.
INDUSTRY TRENDS SURVEY
The December ERA Electronics Components Industry Trends survey is now open and accepting responses from ERA member firms!
Please note: ERA sends this survey monthly to one contact from each ERA member firm via email. Please be on the lookout for this survey in your email inbox. If you don’t see it, check all email folders, including spam. The email will come from no-reply@mail.client.
Help us make this survey a valuable resource for you and the rest of our members by taking 5 minutes to complete this each month. The results are visible only to ERA members and gives us a great cross-section of what our members see on the horizon for the near and long term.
VIEW 2023 SURVEY RESULTS
ERA NEWS
> The ERA White Pin Internship program is now accepting applications for 2024! This internship program offers a manufacturers’ rep (who is an ERA member) a chance to hire a college student as a summer intern, with ERA and the White Pin group subsidizing a substantial portion of the anticipated internship cost. Read more information about the program! Apply as rep, or apply as an intern.
> If you did not have the chance to attend the live STEP 2023 event, but still want to access the event’s valuable educational content, the STEP 2023 recordings are now bundled and available for purchase. The STEP 2023 archive is available to ERA member individuals for $295 and to non-member individuals for $395. Happy learning!
> IMPORTANT EDS SUMMIT 2024 INFORMATION:
- Only Early Space Reservation for Exhibitors is currently open. If your company has had space at EDS in previous years, you should have received an invitation email from EDS Management inviting you to begin the registration process. Please contact info@edssummit.com if you have not received that email. Note: all invoices must be paid by Dec. 31 in order to receive the Early Bird pricing.
- Attendee Registration will open in mid-January. If you have registered to attend EDS in prior years, you will receive an invitation email from EDS Management with the passcode that you need to access the online registration system.
- Mirage Hotel Reservations – The booking link to reserve sleeping rooms at the Mirage will be emailed to you by EDS Management when your registration is confirmed. ONLY BOOK SLEEPING ROOMS AT THE MIRAGE VIA THE LINK PROVIDED IN A COMMUNICATION FROM EDS MANAGEMENT. There are many rooming scams circulating via email, particularly ones that say that Mirage is sold out or close to selling out. EDS Management has sufficient rooms for EDS 2024 and if rooms are not booked through the official EDS Management link, EDS Management will be unable to help you if a problem arises. Please exercise caution when viewing any email referring to EDS that does not actually come from EDS Management.
FOR YOUR CALENDAR
Browse the searchable ERA Industry Calendar for upcoming national and local chapter events!
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> The Fall 
The Electronics Representatives Association announces the latest graduates of its 2023 Chapter Officer Leadership Training (
> COLT — ERA’s live, virtual chapter officer leadership training program — will take place Nov. 1-3, and registration will end tomorrow, October 25! Chapter officers, or those interested in pursuing a chapter leader role, are encouraged to attend and gain creative ideas and practical knowledge about increasing member engagement and excitement in their local ERA chapter. 
> 2024 ERA Conference registration is at 85 percent capacity for attendees! Want to secure your seat at the most popular industry event, and have the opportunity to network with more than 600 rep, manufacturer and distributor leaders? Do not wait. 
> The hurrier I go – the behinder I get!
EXECUTIVE COMMENTARY
Walter Tobin, ERA CEO
by Walter E. Tobin, ERA CEO
This time a year ago, many of us were asking our partners (and were also asked by them), “How’s business?”
We then may have listed a litany of challenges that we were dealing with: long and uncertain lead times, unclear/inaccurate forecasts from our customers and being asked to adhere to and/or pass along NCNR clauses that had never seen before. There were shipping issues, port backups, the Great Resignation phenomenon, work-from-home issues, the search for the “golden screw”— so many things for us to consider and manage every day.
Yet, when a follow-up question was asked or we asked, “How’s your revenue this year?” we often said or heard, “We are having a record year!”
How was that even possible? I guess there must have been some product somewhere that was able to be shipped and billed to someone.
Was all of this product really needed? We have now become aware that there was a lot of double/triple ordering done to hedge our bets on averting product shortages. We may have agreed to NCNR clauses that we would have never even considered to agree to in the past, all while hoping that our own “golden screws” arrived on our docks.
So here we are a year later. Lead times have returned to a more normal cadence and many golden screws have been received. The NCNR clauses that we agreed to are now being enforced, all leading to a period of declining bookings with book-to-bill ratios falling below 1:1. We are now relying on our past order backlog to sustain us.
Bookings down, billings falling, inventory rising…yikes! What are we do to now? Some companies have adopted a “damn the torpedoes: full speed ahead” policy: cancel open orders, refuse shipments on past orders placed and accepted in good faith, renege on NCNR orders and begin to sell excess inventory on the open/gray market. This is all to achieve some short-term relief and to try to maximize their own quarterly/annual financials. Some of these tactics are working!
Some companies are demanding lower prices due to the return of a “buyer’s market” and to take advantage of companies who are now swimming (drowning?) in inventory. These companies are under pressure to reduce their own inventories and sell at reduced prices that will then lead to their own lower margins, which will then wreak havoc on their own financials.
In addition when companies sell their excess inventory to the gray market, it sits out there only to be sold down the road to customers who may take advantage of lower prices who may have bought this product from the authorized manufacturer/distributor channel who were relying on new orders down the road to help them sell their inventory. This excess inventory sits out there and then is sold down the road at lower prices —another short-term action that has longer-term ramifications on our supply chain.
When COVID-19 hit and the supply chain “broke,” why did it break? Because no one had any “upside” inventory to support the need for unforecasted demand inside of lead time. Customers were clamoring for manufacturers to simply “turn on” or build factories to support this unforecasted demand and many were asking as to why the distributors did not have more product on their shelves.
We will never learn, will we? But here we are again, looking to take margin away from the company to our left and right in the supply chain and to demand lower prices which then limits their ability to fund unforecasted inventory in the supply chain.
We need to try to take the long-term approach. It doesn’t help that Wall Street forces public companies to look at business on a 90-day horizon which forces public companies to do the yin and yang every 90 days. Wall Street also forces our publicly traded suppliers and channel partners to fight each other while customers are looking to us to right the ship, all while demanding lower prices.
A new and perhaps naive approach is for each one of us to ask the company above and below us in the supply chain for their help and guidance on preventing the supply chain disaster of the COVID-19 period from happening again. Ask, “What do you need from us?” Perhaps allow them to make a bit more margin on our business to then help fund new factories, unforecasted demand and shorter lead times. Build a true partnership based on mutual respect and trust, and not just on price alone.
Try it on one of your supply chain partnerships and see what they say. What harm can it do? You may end up positioning your company ahead of the rest of your competitors when times get tough again. It’s worth a try!
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