Every day, chip shortages are substantially affecting industries from automobile manufacturers to heavy industrial equipment to medical diagnostics equipment and electronics manufacturers. This presents serious challenges to many enterprises. Here we examine the issues and how a smart response can be implemented.
Chip Shortages Are a Fact of Life Now
A recent article in The Wall Street Journal took a hard look at the chip shortages. One passage neatly summed up the drastic effect of the shortage on the industry. “In December, the parts flow from Continental, Robert Bosch GmbH and other suppliers had so dried up that VW announced it would stop production of bestselling brands such as Audi and its namesake VW brand at plants in Europe, China, and North America. Audi, citing a chip shortage, furloughed 10,000 factory workers for the first time since the spring lockdowns. Ford Motor Co., Honda Motor Co., and others soon reduced output of vehicles from big pickups to compact sedans.”
The damage to automobile manufacturers has gotten much of the coverage, but the chip shortage is just as severe elsewhere. Many large industrial and medical equipment manufacturers are feeling the pinch, too. A very expensive piece of machinery can be idled for the want of a few dollars’ worth of electronic components. The chip shortage has widespread effects and a deep economic impact. Any enterprise that relies on a complex supply chain should completely examine the current state of their business models and be prepared to restructure them if they intend to survive.
The crucial questions to be answered are: how did it happen and what can be done?
At Tada, we have proven solutions to these supply chain issues. Our experience has led us to recommend a phased response. The process consists of three phases designed to deal with customers' immediate needs and a longer-term plan that will last into the future.
Our experience in the supply chain business coupled with our unique technology enables us to offer an Emergency Corrective Action Plan with the following components:
Chip shortage is real and will continue to hound automobile and industrial equipment manufacturers for some time to come. Post-COVID pandemic, supply chain issues experienced by chips are now extending to many other parts and raw materials. At Tada, we have helped many customers with these and other supply chain issues with our Multi-Tier Collaboration system.
If you are interested in learning more, we’d love to talk!