An Interview on Commodity Management with Mike Gately
Mike Gately is the Global Commodity Director at Converge and has over 30 years of experience in the electronics industry. He is a skilled account manager, business developer, and has significant experience all throughout the electronics industry, with noteworthy expertise in semiconductors, strategy, and international relations.
Please tell us a little bit about yourself!
I came out of school and entered the investment industry as I looked for something to do between undergrad and graduate school. An opportunity came up in this industry, and I decided to try it out.
Initially, I was brought in to sell, and then was moved to inventory purchasing. Eventually, I became a group leader for purchasing and managed both semiconductors and technology products. Then, I became the commodity manager for General Integrated Circuits (ICs) and eventually took over all of commodity management, which is what I do now.
Do you specialize in a specific commodity?
Early on in my career I was also a memory buyer and I bought some CPUs, but board level components are what I know best. While I do have a general knowledge of all commodities, the true experts are the individual commodity managers that I manage that focus on just one commodity.
What has changed for the electronic components market in the last few years?
Consolidation, mergers, changes in technology—so much has changed over the years, and even now are still changing quickly with geopolitical issues and the global economy beginning to be driven more and more by semiconductors. This means that even people who are not in the electronics industry have a better understanding of what we do because the semiconductor industry has been at the forefront of the news lately.
Though semiconductor manufacturers have always been balancing a fine line to build just enough, as the world becomes dominated by semiconductors in everyday items (i.e., coffee makers, computers, thermostats, cars), COVID-19 really exploded the problem. We all had to change how we live our lives, and this required equipment. Plus, now there are geopolitical problems that are increasing the strains on commodities.
How does Converge interact with the commodities market?
At Converge, all our commodity managers focus on certain geographies and products. As they communicate with one another frequently, this enables us to not only assist with solving shortages or moving excess, but also to act as consultants for customers for what is happening in the market.
Looking to the future, what do you believe 2023 holds?
Initially, I thought we might have a softer landing relative to previous shortages given the scope of this one. Every shortage is different and this one has certainly been epic. With fundamental issues remaining, it will be vital to see what happens over the next few quarters.
What we’re seeing now is that the market is stabilizing for the wrong reasons. The macroeconomic situation, along with other factors, has slowed the demand in certain verticals which has allowed for the redistribution of materials. This gives the appearance that the market is stabilized and good again, but it is still adjusting.
More than ever, obsolescence will certainly be a big issue. Companies still need the older products, and this will be more important than ever. So many people invest in manufacturing the newer, better products, but there is a huge market for the older components that still go into products.
What advice do you have for companies that depend on electronic components?
The biggest thing that we have learned from this shortage is that now, just-in-case inventory is vital. In the past, everything had been about just-in-time inventories. Companies were only bringing in inventory when it was needed for production, so they didn’t have extra costs that come with added inventory. However, the recent shortages caused so much of a headache with production delays and big increases in costs that many companies are realizing it is more important than ever to stock some buffer inventory on critical components that are vital to builds.
In addition to this, companies must always monitor the market. Knowing your entire supply chain from top to bottom, raw materials to finished product, could really save your supply chain by knowing in advance know what is coming down the line.
How can Converge help companies manage commodities as the industry continues to change in the next few years?
Converge has a wide view of the entire supply chain since we’re well positioned around the globe. We also have commodity managers for every type of product in every region. Combining our expertise with unique data and analytics enables us to be great consultants and partners to all our customers.
To learn more about how Converge can support your supply chain in 2023, contact us today.