Smarteq is closely following up the latest and current events taking place in Asia, the hub of our manufacturing facilities, where we can see instability in the supply of critical raw materials and components for our products, the restrictions implemented and to be implemented in the mobility of the working force from and to Taiwan due to the pandemic and the limited and decreasing availability of freight slots from Asia to Europé.
The immediate consequence of these events is not only a considerable impact on our cost structure and in the stability of our offer in the coming periods but also current lead times (12-14 weeks) will be longer if lockdowns withstand during the summer.
Smarteq has set an action path already on execution to mitigate and manage the impact of these unforeseeable circumstances, and to extend our support to our distributors and customers during these challenging times ahead of us:
Smarteq has increased our buffer stock for additional parts of the high-runners, frame ordered, and forecasted parts, even without committed orders.
However, it is highly recommendable to review the demand with your customer and end-user, and if possible, establish a forecast for the coming 6-12 months, and place orders accordingly for minimizing the risk of an empty stock or air freight at unmanageable higher costs.
Smarteq will review and adjust our cost structure to mitigate the impact in the prices to come, which will have to be adjusted during the coming weeks. As mentioned, higher MOQs and 6-12 months forecasting give a much wider spectrum aiming for less sensitive adjustments.
Already this week Smarteq planned relocation of production for non-critical parts and other components to production facilities located in less affected areas. This measure will have a positive impact on our supply chain hopefully by Q3.
Smarteq strongly recommends its dear partners and customers to inform your customers and end-users on these conjunction circumstances and the coming impact on the costs and delivery times.
By the end of Q1 Smarteq started the evaluation of establishing a manufacturing unit in Europe, as a long-term strategic response to the challenges that arose during the past year.