How to handle material shortages like an expert


Sometimes the cable component supply chain can’t keep up with demand. Material shortages have been frequent for the last 2 years, and we expect they’ll continue for the foreseeable future.

Handled poorly, material shortages can affect your production timelines or even cause downtime while you wait for more parts or address part failures.

Handled properly, however, material shortages are a hiccup rather than a headache. Following best practices can keep production on schedule, and your internal team will hardly know there was ever a threat.

In this article, we’ll discuss the right and wrong ways to handle material shortages, including:

What material shortages look like

Since 2020, suppliers from Molex to JST have struggled to keep up with climbing market demand for cable components. In many cases, the shortages start with the most basic elements, stuff previously deemed almost inconsequential by most custom cable suppliers — like the raw minerals used to forge parts.

For instance, a global beryllium shortage naturally leads to a lack of Molex ribbon cables that use a particular beryllium alloy. These types of shortages used to be rare. Now they’re frequent.

So you may look into ordering ribbon cables or internal fans or basic connectors and find an estimated 52-week lead time where you expected 12 weeks. Securing even the most basic parts requires careful planning and risk management.

You have a production schedule built around your predicted or certain demand for product. By extension, your custom cable supplier has a production schedule designed to meet your needs. Shortages throw these schedules into jeopardy.

Dealing with material shortages without risking production timelines or product quality is hard work, and industry experience goes a long way when it comes to identifying trustworthy sources of materials.

Authorized distributors are companies who are contracted with an OEM to sell their parts to the wider market. Purchasing from authorized distributors entitles you to any warranties or service agreements that come standard from the part’s original manufacturer and the buying process is similar to purchasing directly from the manufacturer themselves.

“Unauthorized distributors” are everyone else, running the gambit from resellers and overstock warehouses to “knock-off” manufacturers. In plenty of cases, a part received from an unauthorized distributor is identical to that from an authorized distributor in every way but the name on the invoice.

Sometimes it’s not so simple.

There’s a reaction we see too often from people faced with potential material shortages: They panic and look for whatever volume they can find through unauthorized distributors like resellers or warehouses who trade in overstock and “gray market” parts.

Is that safe? Our answer is that it depends. Some unauthorized distributors offer part guarantees and warranties. Some don’t.

But it comes down to confidence in the product and trust in the vendor. There’s a best-case and worst-case scenario, along with a whole spectrum of cases in between.

The dangers of working with unauthorized distributors

When working with an unauthorized distributor makes sense

A lot of the fans that go into custom cable assemblies are in short supply at the moment. We need hundreds of a specific DC axial fan to build custom assemblies for one of our customers. Recently, we received a notification that an authorized distributor had 328 fans enter their inventory. We called the distributor as soon as we could, but someone else had swooped them up.

A couple days later, we saw 328 of that exact part number for sale by a reputable, but “unauthorized,” reseller.

This is the best-case scenario when it comes to working with unauthorized distributors.

No, this vendor wasn’t certified by the part’s manufacturer as an official distributor. But they were a dealer we trusted based on experience, and we could confirm that the parts had spent very little time on their shelves.

 We saw an opportunity to pay the reseller’s markup and secure the exact part we needed.

But there are a number of ways that this same process — finding available inventory from an unauthorized distributor and pulling the trigger — could lead to problems. When you purchase from an unauthorized vendor, you may not get:

  • The exact part you need for your design 
  • In good condition 
  • At the price you’re looking for 
  • Labelled to meet your regulatory requirements 

If you’re in enough of a crisis that you’re willing to take risks, you should take care not to throw gasoline on the fire by proceeding without any caution.

When working with an unauthorized distributor goes wrong

Another example about a different type of fan shows what a worst-case scenario looks like and the potential costs involved with taking chances on part quality.

We produce a cable assembly for one of our customers that goes into a large piece of enterprise industrial equipment. That cable assembly requires a particular fan for cooling, but the part was out of stock indefinitely.

For the order size we were looking for, the lead time on the fans was listed at 52 weeks. But the customer would need new fans in less time. They found some inventory at an unauthorized distributor who — after some research — we recommended they avoid.

Our customer was desperate, so we agreed to build their assemblies with the fans they found if they accepted the risk in the case that the fans failed. They went ahead and ordered the fans and had them shipped to our facility.

MTI employee at work

When they arrived, we weren’t 100% sure what we were seeing. It was immediately clear that there were at least three different types of fans in the shipment. Some seemed to have been worked on before, as they had modified wire lengths. Some appeared damaged in transit. When we tested them, they drew four different amounts of current.

After a lot of time tinkering and a lot more time building, we knew the product wouldn’t meet our customer’s standard. We sent the assemblies with our recommendation that the customer avoid using them — sans invoice.

A few weeks later, after receiving our shipment and making multiple attempts to communicate with the fan’s supplier, that customer sent us a message thanking us for being so careful. They said just a single one of those fans entering their production could have shut their lines down and cost them millions of dollars.

In the end, we were able to get assemblies made for the customer in smaller runs as parts became available here and there, and their production never stopped.

This example covers several ways getting parts from unauthorized distributors could go wrong:

  • They aren’t the parts you ordered 
  • They aren’t identical 
  • They’re damaged 
  • They were stored improperly and degraded 
  • The distributor doesn’t provide necessary support 

Any one of these alone can be costly and is worth avoiding. These risks are the precise reasons we don’t like working with unauthorized distributors unless we are 100 percent confident in what we are buying.

The “gray market”

Another danger in working with unauthorized distributors is that you don’t know where a part came from or how a reseller originally acquired it. When stored correctly, it usually isn’t an issue. But the manufacturing circumstances of parts can make a difference.

Some parts are built by contract manufacturing facilities and shipped to a distribution center to receive a sticker of authenticity. Those contract manufacturers are sometimes asked to make parts by other parties to “cut out the middleman.”

Say you’re in touch with a manufacturer’s rep about a part you need, and they’re working with you to make sure they can meet your production schedule. However, you panic-buy the part when it becomes available elsewhere.

Sure, the part you received performs identically to what you would’ve bought from the manufacturer. But there are some serious downsides to consider:

  • You won’t receive support from the manufacturer in the event of part failure 
  • Your parts lack the traceability required for UL certification and use in regulated applications 
  • When the rep follows up, and you no longer need the part, they can assume you found another way to buy it. You risk damaging relationships with suppliers. 
  • You won’t receive support from the manufacturer in the event of part failure
  • Your parts lack the traceability required for UL certification and use in regulated applications
  • When the rep follows up, and you no longer need the part, they can assume you found another way to buy it. You risk damaging relationships with your suppliers

That shipment from contract manufacturer to holding company/distributor is a crucial step in certifying that your products meet a high-quality standard. And nurturing relationships with OEM’s helps when inventories get thin.

How Multi-Tek forecasts and solves material shortages

With so many ways to go wrong during a material shortage, how do experts work through material shortages? At Multi-Tek, the short answer is: with hard work and a commitment to customer service.

The first step to handling material shortages is staying ahead of them. Our proprietary Parts Issue Tracker helps us see when inventories start running low on parts we need for future orders. We can draw up an inventory agreement with our customers and snatch up the parts before supply runs out. Then we have enough inventory in our own facility to get through the shortage without hiccups.

MTI's parts issue tracker
an example of what our proprietary Parts Issue Tracker shows us

If you had 100 percent visibility into your production schedule over an infinite timeframe, we could work ahead to ensure you never even knew about any material shortages. But that’s not realistic, and sometimes issues appear that no planning can prevent.

If we understand your production schedule in more detail, we can know the best way to help. While we prefer producing in large runs because it saves time (and therefore cost) in terms of tooling setup and teardown, sometimes flexibility solves part shortage problems. The extra costs tend to be worth it when the other option is a production stoppage.

We investigate opportunities to gather parts in any way possible. Maybe there’s no way to get a shipment of 1500 parts on time. But we may find 350 parts from one distributor, 300 from another and so on, gathering what we can when we can.

If we can know that your demand for 1500 cables per quarter is really a demand for 500 cables per month, delivered before the third Monday of each month, then we know how to be helpful. Maybe we can’t get parts for 1500 cables in a month, but we can get parts for 500 at a time — if we make enough phone calls.

When it comes to unauthorized distributors, our caution comes from experience. But so does our understanding of which resellers are trustworthy, which are risky and which are to be avoided at all costs. Without thorough understanding of the market, none of this is possible.

What you can do to help

The more clarity we have about your production needs, the more helpful we can be with creative solutions to material shortages. Your transparency is as invaluable as your patience.

Let us know what you need and when — and we’ll do what we can. It’s what separates us from our competition.

Need an attentive custom cable partner?

We know the market is struggling with material shortages. We can’t mine the copper or forge it into wire, but we’ll flip every switch we can to get custom cables into your hands on time.  It’s how we help.

Contact us if you’re looking for a more service-driven partner to help navigate a challenging supply chain. We’d love to talk shop and specs.