Navigating Today’s Supply Chain Challenges

We’ve all experienced it. From toilet paper, exercise equipment, toys, cars, and everything in between, the supply chain during COVID has been blamed for many consumer goods shortages, and rightfully so. During lockdown, how many of us stalked our local warehouse clubs for that elusive delivery of toilet paper, scared of the implications if none was found? Or maybe you tried negotiating the price on eBay for a set of weights that was 3-4x the usual cost? Those shortages seen by the average consumer also heavily plagued electronics manufacturers and their customers as well.

Now imagine being a start-up during COVID. A start-up in the electronics industry. A start-up in competition for those highly demanded, severely constrained electronic components. A start-up with no name recognition, no history, and no relationships with manufacturers and / or distributors. Seemingly simple items like capacitors and resistors saw 20+ week lead times, with other parts advertising lead times of 52, 98, and even 104+ weeks. That’s what the supply chain looked like for Oxide in 2021, and in many component categories, still looks like today.

Our Operations Team has been hard at work since late 2020 trying to secure supply for a product that, throughout 2021 and into 2022, has continued to undergo design changes. The procurement function became a delicate balancing act taking into account lead time, cost, industry outlooks, and working closely with our engineering team regarding upcoming design changes. How much faith could we put in the demand for a given part today, when we knew an updated Bill of Materials (BOM) would be published in a few weeks? For parts with lead times that would extend past our first customer ship date, how much supply should we purchase 12-18 months ahead of schedule, knowing our design was not finalized? Working with borrowed money (literally, from our investors), we needed to quickly put in place a robust procurement system to balance the issues we faced. We needed an actionable plan that solved supply issues on many fronts. So, we did what the average consumer did during COVID; we stalked the stores (in our case, online distributors) day and night, weekdays and weekends waiting for restocks. We negotiated with suppliers, investigating whether there was additional inventory available but being held back. In some cases, being a start-up and only needing small quantities was helpful. We were able to get sample quantities of parts that would last us through our engineering build cycle. However, being a small start-up also meant we were up against the big guys. Getting recognition of our existence, let alone inventory allocated to us, was often a stressful, tedious process. What have we found that helped our team the most? Strategic supplier relationships.

There is not enough that can be said for setting up strong, trusting relationships with your suppliers. All of us on the Operations Team at Oxide have extensive backgrounds at some of the world’s top manufacturing and supply chain companies. We’ve seen and heard it all. We know the lengths many procurement professionals will go to in order to secure supply during allocations. They may inflate demand knowing their allocation quantity is based on their demand, or they may communicate required dates that are several weeks or months ahead of when the supply is actually needed. However, those responsible for the supply allocations usually realize this. When the truth comes to light, that company’s future demand is often taken with a grain of salt. It becomes difficult to trust that company again. That’s where the Oxide Ops Team differentiate ourselves. Oxide’s principles and values truly drive our everyday work. We’re firmly committed to our principles of Integrity, Honesty, and Decency, and integrate them into all of our business practices. We strive to balance our sometimes conflicting values in order to strengthen our vendor relationships. Here are a few of the Oxide values and how we showcase them in our supply chain relationships.

• Candor — We’re upfront about our needs, including quantities and dates. As these items change, we do our best to proactively communicate those changes to our suppliers. We know there will be times we need our suppliers to jump through hoops for us, to expedite, to get supply not otherwise allocated to us. However, we also understand these should be one-off instances and not the norm. We want our supplier reps to succeed just as much as we strive for success at Oxide. Being candid helps ensure we are all set up for success.

• Rigor — We demand a lot from ourselves, but we also demand a lot from our suppliers. If a date slips or the component quality isn’t as expected, we request our supplier proactively communicate, root cause, and implement corrective action as needed. We have a small team and we rely on our suppliers to have the same sense of rigor as we do at Oxide.

• Teamwork — We look at the relationships with our suppliers as extended team members. We want to instill in them a sense of pride for the Oxide product, just as much as we support them and their company. Successes and failures are shared amongst everyone involved. We will not be successful at Oxide without our extended team.

• Thriftiness – We’re a start-up with maniacally focused founders, a very involved board of directors, and limited capital. We’re building a massive product while being very cognizant of costs. Given our small size and start-up status, we rely on our relationships with our suppliers, coupled with massive amounts of internet searching and price comparing, to try and get the best costs we can. We know we’re paying more for items than the big guys, but we’re trying to close that gap as much as we can. Getting our suppliers on board with our vision, and getting them excited about the Oxide rack, is instrumental in price negotiations. We’re also sure that one day we’ll be one of those big guys. :)

Aligning ourselves with suppliers we can trust and partners invested in the success of Oxide has allowed us to successfully navigate the current supply chain conditions. Treating others with respect and kindness cannot be underestimated. Building strong relationships on an unfaltering basis of Integrity, Honesty and Decency is key. Adhering to our principles and balancing our values will continue to drive our successes.