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Companies are changing the supply and demand formula in the wake of severe chip shortages, but it’s not a simple fix.
Companies that were hit with chip shortages during the pandemic are changing their strategies to prevent future problems, deploying a combination of supply chain mapping, second sourcing, and digital transformation.
Those shortages caused a $200 billion loss for automotive manufacturers, and the disruptions were far more widespread, in many cases lasting for years. Companies of all sorts were forced to beef up their digital transformations, improve visibility with suppliers and customers, and to engage in more long-term agreements.
“Without a doubt, semiconductor OEMs have been investing in improved resilience, planning, and management processes at a rapid pace,” said Scott Studer, vice president of customer experience, S&OP & Supply Chain at NI, an Emerson company. “Just recently, Gartner noted that supply chain planning software spend will double over the coming few years, a trend we’re certainly living.”
Last year, SEMI launched its Supply Chain Initiative to pool and share best practices aimed at improving supply chain agility and resilience. “Not everybody had risk management programs in place going into the shortage, and the wake-up call was certainly painful,” said Bettina Weiss, chief of staff and corporate strategy at SEMI. “So implementing just the most basic of risk monitoring programs is very helpful, as is multi-tier mapping to gain visibility into your supply base and your supplier’s suppliers so you can make better decisions faster. It’s also important to really monitor key metrics like leading and lagging indicators, capacity monitoring, and lead times. And we’re working with our supply chain Advisory Council on a dashboard that would capture the most important indicators.”
