To Face Future Supply Chain Challenges, OEMs Must Consider Fundamental Changes

By Logan Wamsley

The COVID-19 pandemic thus far has taught us much about the weaknesses still present in the modern supply chain, but it has also taught us what is at stake should these weaknesses not be addressed. As shortages in electronic components and semiconductors continue to make headlines and be a political discussion in the U.S. and abroad, particular attention has been placed on the human side of the supply chain — and what exactly can be at stake besides financial loss.

“This semiconductor is smaller than a postage stamp, but it has more than 8 billion transistors —10,000 times thinner than a single human hair in this one chip,” said the White House in a recent statement. “These chips are a wonder of innovation and design that powers so much of our country, enables so much of our modern lives to go on — not just our cars, but our smartphones, televisions, radios, medical diagnostic equipment, and so much more.” In the same speech, the White House announced the signing of a new executive order that will allow for the allocation of $37 billion to help address the recent semiconductor shortage.

Beyond federal intervention, however, the most effective way to overcome a volatile market is to determine what actions a manufacturer can take on their own. Few options are more effective than moves to uncouple the OEM from the risks associated with a just-in-time inventory model by insulating their supply with bulk inventory purchases before the production phase — ideally acquiring enough inventory to last the entirety of the product’s lifecycle. Although such a transition takes careful deliberation and additional considerations for secure long-term storage and carrying costs, many of these costs are more than made up for by avoiding supply chain disruptions, obsolescence issues, price inflation, and the need for drastic measures such as costly redesigns.

Even then, such concerns are mitigated entirely with the help of a Partstat inventory ownership solution, which not only allows the customer to acquire all necessary inventory without the loss of any working capital (which can then be used to avoid staff furloughs or layoffs), but allows them the use of Partstat’s industry-leading climate-controlled facilities. Here, the inventory can remain safe and secure until it is needed, at which point Partstat’s experienced team will pack and ship the inventory anywhere in the world.

The world is increasingly paying more attention to supply chain issues, and what repercussions they might have on our society. But just because federal policies are making efforts to minimize the losses now and in the future, that does not mean that manufacturers cannot make changes on their own. The most effective way to insulate a supply chain from future risks is to look within.