Assignment task:
Chipset shortages causing delays IT infrastructure projects are experiencing massive delays due to a shortage of chips and semiconductors, which will persist well into next year. Altron Systems Integration is leveraging its global network to assist local companies in securing infrastructure for their needs. Technology research and consulting company Gartner has warned that the chip supply is only likely to recover from the second quarter of 2022. It recommends that companies should extend their supply chain visibility and diversify their supplier base. Tracking leading indicators and entering companion models can also mitigate the risk. The worsening chipset crisis shows supply chain is still at risk. As the world shut down because of the COVID-19 pandemic, many factories closed with it, making the supplies needed for chip manufacturing unavailable for months. Increased demand for consumer electronics caused shifts that rippled up the supply chain. Orders began to pile up as manufacturers struggled to create enough chips to meet the new levels of demand. A backlog began to grow, affecting almost all industries. New cars are hard to come by in 2021, and so are stoves and refrigerators. The reason? A global shortage of computer chips. From computers to cars, to gaming systems and appliances, multiple types of products include semiconductor chips - which have been in short supply since the start of the COVID-19 pandemic. The global medical crisis and ensuing shutdowns revealed weaknesses in the global supply chain across industries. Since computer chips are essential to various products, shortages of chips have led to other products, such as new cars, becoming more scarce. Since lead times for semiconductor chips are about a year out, these product shortages could last into 2023 and beyond. SCMDOJO is looking at the worldwide shortage of computer chips, what caused it and how supply chain teams and professionals can emerge from this crisis with stronger supply chain management skills. What Is Causing the Global Semiconductor Shortage? The short answer is that COVID-19 did not cause the shortage of computer chips all by itself. The following factors have contributed to the computer chip shortage. Computer Chip Sales Since automakers reduced their orders for computer chips in spring 2020, those chips went to consumer electronics makers instead. When automakers stepped up their orders again, those semiconductor chips were already spoken for. Global Politics Politics came into play when the Trump administration began regulating semiconductor sales to Huawei Technologies and other Chinese companies. Meanwhile, American companies lost access to chips manufactured by Chinese companies that the U.S. government had blacklisted. Damage to Factories Two factory fires in Japan reduced the supply of advanced sensing devices and fiberglass for circuit boards. Shipping Delays Slowdowns in global shipping and shortages of shipping containers due to the COVID-19 pandemic have delayed the arrival of chips from overseas. Lean Supply Chain Management Another contributor to the global semiconductor shortage is the trend of keeping a lean supply chain with "just in time" shipping essential parts. While this supply chain management style has saved companies money on storage, lean supply chain management only works if the products are readily available. Even the world's richest semi-conductor manufacturers are swamped, and they're a long way away from being able to meet demand.
QUESTION: As the logistics and supply chain manager of a food producer of your choice, that sells directly to wholesalers, the CEO has mentioned that one cannot underestimate how much money is being lost because we do not have full control of our supply chain. The CEO has asked you to critically examine why budgeting variations need to be more clearly identified within the organisation.