Disruptions of coronavirus pandemic to impose 4-to-12-week lag in military electronic parts supply chain

FORT WORTH, Texas – Effects of the COVID-19 coronavirus on the U.S. military electronic parts supply chain likely will push-out lead times from four to 12 weeks from order to delivery over what manufacturers had come to expect before the pandemic swept over American shores.

This is the prediction from Don Akery, president of U.S. and international electronics distributor TTI Inc. in Fort Worth, Texas. The market disruption comes at an inopportune period; the defense electronics supply chain had been recovering from disruptions caused by a surge in demand from Trump Administration defense spending increases.

Defense integrators ranging from circuit board manufacturers to finished military platform designers had been complaining about delivery delays of electronic parts since at least 2018 because of a towering wave of demand triggered by Trump defense budget increases, which began shortly after President Trump took office in early 2017.

"Lead times have been extended in the defense space for the past couple of years," Akery told Military & Aerospace Electronics in an early April interview. "We saw it start more than 18 months ago, as demand exceeded capacity. Some had seen lead times push out to 50 weeks, which is unprecedented."

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Still, the defense electronics industry has been able to add capacity to make up the supply shortfall, and saw the market start to sort itself out early this year. "They have put more capacity in place, so lead times have been stabilizing," Akery says.

Then the coronavirus pandemic started taking its toll on the global electronics supply chain beginning around late January. "Two to three weeks from now we will see the lead-times push out again," Akery explains. "I would say we will see lead times push out a minimum of four weeks, and for as long as 12 weeks."

Military demand for electronic parts has not slowed, which puts extra temporary pressure on distributors and other parts suppliers. Complicating the picture is surging parts demand from the medical industry for systems like respiratory ventilators to help victims of the coronavirus pandemic.

One market factor with the potential to ease the pressure is a possible temporary dropoff in demand from heavy industrial rugged electronics as non-essential industrial projects take a pause.

"Demand is there, and the defense industry has taken more product in the Americas," Akery says. "The first quarter of 2020 was the highest booking quarter in our history."

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Moving forward, TTI officials are doing everything they can to get parts to the manufacturers that need it most. "Will our customers be able to get everything they need? We will go through a lull, but we don't know exactly for how long. It could ease lead times if rugged industry applications slow down."

Military systems designers also may have to get in line behind the highest-priority electronics manufacturing, which will revolve around medical applications until the coronavirus pandemic begins to subside. When that happens is a matter of conjecture. "There is a priority on medical orders," Akery points out. "Medical orders for us are up 10 or 20X from what they had been."

TTI is putting additional measures in place to deal with the market situation. "The supply chain is pretty critical," Akers explains. "We have an external website we had up here in the Americas since the end of February to communicate to the customers and to the suppliers to help them file for exemptions if they have plants in parts of the world with shelter-at-home orders.

"We also have processes in place where our inventory is not always made available to the general public, but first to our regular customers in case of a constrained supply chain."