Chip Shortages are Here to Stay - Be Ready to Respond
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.
What caused the chip shortage?
- Overall Industry Demand
Software controls more and more things. Chips make software run. Many industries including automotive, heavy machinery and medical equipment are experiencing a rapid transformation to software driven architectures and adding more and more electronic components.
Solution to the Chip Shortages
Emergency Corrective Action PlanOur experience in the supply chain business coupled with our unique technology enables us to offer an Emergency Corrective Action Plan with the following components:
- Part taxonomy to ascertain chip revision levels
- Identification of critical chips and their multi-tier suppliers
- Capacity availability of alternative chip revisions
- Alternative supply sources
- Monitoring of demand flow and coverage
- Creation of a build capacity allocation model
Interim actions for OEMs
- Leverage Tada Supplier exchange network to identify additional sources for critical chips
- Connect OEM and Tier 1 suppliers to the source to bridge supply gap
- Repeat to ensure supply is covered in short term
Long term actions
- Establish a digital control tower with aggregated demand, variability and flexibility needed across the nodes
- Improve the visibility into the supply chain through a multi-tier assessment and establish strategic buffers on critical parts at critical nodes across the supply chain
- Develop a commercial framework to serve as a roadmap for implementing strategic buffers and other levers