Experts say Supply Chain Shortage will Impact Several Industries for some Time to Come
The shortage of semiconductors worldwide is not showing signs of ending any time soon. The crisis will impact several industries for some time to come, according to experts.
Mixcomm CEO, Mike Noonen states, “…semiconductor supply chains were kind of surprised by the pandemic. They did not expect to see the pandemic driving up demands for laptops and tablets, etc. I do think that is more of an aberration, not necessarily a traditional semiconductor cycle.
He continued, “We are now in a world where every industry is either enabled by, or dependent upon semiconductors. There isn’t one industry that is not influenced positively by semiconductors. In normal times this will smooth out the booms and the bust. There is still going to be a semiconductor cycle except for rare events, such as the pandemic. Hopefully, there will be a more controlled boom and bust.”
Noonen also said, “Pandemic plus too heavy reliance on lean inventory, came together to create the havoc that we face today in this shortage.”
According to Appleinsider.com, “The global chip shortage will continue to worsen for the time being, according to Intel CEO Pat Gelsinger, with the industry forecast to endure a worsening situation throughout the second half of 2021, before there’s any real hope of recovery.”
The dependence on semiconductors has caused production issues across many different industries, including the car industry. The Wall Street Journal reported that Volkswagen “warned that the global shortage of semiconductors affecting car production would worsen over the next six months.”
Dr. Thomas Goldsby, the Haslam Chair of Logistics at the University of Tennessee’s Masters of Science in Supply Chain Management online program says, “Automobiles are more dependent on semiconductors that direct and manage engine performance, safety features, navigation, and entertainment systems. A modern car can have anywhere from 1,500 to 3,000 chips.”
Goldsby predicts that, “The number of semiconductor chips required for automobiles will continue to increase with cars becoming ‘smarter’ and employing propulsion systems.”
“The new way of thinking during this chip shortage has become: if you don’t have it in stock, you don’t have it. This chip shortage has taught us that the only way to succeed is to buy way out in front of demand in order to secure what is needed from the supply chain,” said Mark Dohnalek, President and CEO of Pivot International.
He advises, “Without this security, companies will have a higher risk level of being shut down for periods of time. Right now, during the crisis, companies need to buy well in advance, more than they previously operated at. When we are past this shortage, companies will modify their previous approach of very lean inventory management with high stock to mitigate from this happening again,” he advised.
Alex Hersham, Zencaro CEO, expects there to be more disruptions. “I’d love to paint a more positive picture for the future, but given the amount of strain and the lack of buffer in global supply chains, it’s almost inevitable that another disruption event will occur in the coming months. That could be anything from another Covid outbreak at a port to an orchestrated cyber attack,” he said.
Hersham also warned, “Businesses need to make sure their supply chains are agile and ready to respond, and that they make the investment before it’s too late.”
Story via Forbes
