Supply chain resilience strategies for handling semiconductor shortages explored
- Published: Tuesday, 01 February 2022 10:08
A new paper by SAP looks at how organizations can respond to damaging semiconductor shortages. ‘Maintaining Business Continuity During Periods of Semiconductor Shortages’ highlights supply chain resilience strategies for organizations to consider implementing for business continuity.
Key points from the paper, written by Jeff Howell, Vice President, High Tech Industry Business Unit, SAP, include:
- Today’s global semiconductor shortage is not only widespread across industries. It is also expected to be long lasting. Many believe it will extend well into 2022 and likely into 2023.
- This is not the first chip shortage, and it will certainly not be the last. Demand and supply are constantly out of phase.
- Organizations need to simultaneously work across three different time horizons: the immediate, the near term, and the long term. By doing so, they can help ensure revenue continuity, fulfill customer expectations, and achieve greater resilience.
- In addition to timely and accurate data analysis, other activities that are critical in the immediate time horizon include visibility, collaboration, and exception management. Network-wide collaboration is also critical.
- For the near-term horizon (6 to 12 months), the paper describes three activities that can help bring relief to stressed processes by implementing new tools and redefining existing processes.
- In the long-term horizon (12 to 18+ months), the paper focuses on the need to establish greater resilience: The goal is to withstand future shocks to the semiconductor industry while keeping the demand and supply curves in phase. To achieve resilience semiconductor foundries can reshore capacity to domestic markets and focus on the talent aspects that are necessary in an intellectual property-based industry. For OEMs, the paper highlights the benefits of match set optimization – a new supply planning method that begins with fixed supply to determine demand (what can be made) versus starting with demand to determine supply requirements. There is also a need to move from single-tier collaboration to a true industry business network. Such a network needs to go beyond exchanging logistics data (that is, forecast and commits) and serve as an open and secure platform to exchange data on logistics, sustainability, compliance, and designs.