The global semiconductor shortage shows no signs of abating. So, what can we do to alleviate the symptoms and keep our businesses running?
The global semiconductor shortage shows no signs of abating. So, what can we do to alleviate the symptoms and keep our businesses running? Given the current pandemic, this isn’t even the only crisis businesses face in 2021. However, for the increasing number of organisations that include digital products in their inventory, it’s definitely something that will be at the forefront of manager’s minds.
What’s causing the silicon chip shortage?
There’s been a steep rise in the number of chips needed in the last few years as technology advances. Unfortunately, there hasn’t been a rise in global chip manufacturing capability to match.
The factories that make semiconductors are a high-tech, high-investment product in themselves, needing a lot of computers and robots to build and run them.
Big-name manufacturers including Nissan and Cisco are reporting serous delays in their production schedules due to a lack of access to vital chips. We’re now in a situation where Apple and Sony are reporting 6-month plus delays for releasing new iPhones and the latest PlayStation that are entirely due to the chip shortage.
The pandemic’s effects on every aspect of the global market has caused delays for manufacturers of any product that contains a microchip. It’s anticipated chip shortages will be a problem for at least another 1-2 years, so expect to face problems until then.
What can companies do to avoid problems caused by the semiconductor shortage?
If you’re part of a business that includes the manufacture or reselling of any product with a computer in it (computer hardware, mobile phones, automotive, manufacturing equipment, consumer electronics, and aerospace are just some of the areas affected), you will already have been affected.
Unless your company is building a chip manufacturing plant themselves, the only way to alleviate the crisis is by planning your procurement of chips and computer products well in advance. By using a digital procurement platform like SAP Ariba, you can get easy direct access to suppliers and find out when and where they can meet your buying requirements.
Additionally, you can combine SAP Ariba with an integrated ERP solution like SAP S/4 Hana to keep track of components from the moment they leave the factory until the minute they leave yours. Knowing precise numbers for your usage of vital components will help you predict and meet future demand. Better data about your component requirements will also help you plan your orders further in advance, making it easier to keep enough stock to maintain supplies to your customers.
Without digital procurement and advanced ERP, companies stand to suffer even more, since there is no sure end to the current component supply crisis. Through better data management and optimised purchase planning, companies can use digital procurement to maintain vital supplies and better meet customer needs.
Keeping up with consumer demand is all about keeping up with your organization’s own demands. By making the most out of digital procurement, you are making sure you can give your customers the service they deserve, even if we merely join a global supply network like the SAP Ariba Network.
If you want advice on how you can get the most out of SAP Ariba’s abilities and keep your production lines moving, get in touch today.