There isn’t an electronic device around that doesn’t need a microchip to function; everything from the tiniest smartphone to the biggest factory circuitry rely on them! When you think of modern technology, it’s not surprising that the ever-evolving car industry is therefore one of the most prolific adopters of microchip technology today.
From the satellite navigation that gets us to where we’re going, to the parking sensors that ensure we don’t hit anything when we get there, most of our cars now need microchips to make sure everything is communicating and running as it should be.
That’s exactly why the global microchip shortage is having such a profound effect on the global car manufacturing industry.
But why is there a shortage of microchips?
Microchips are notoriously difficult and expensive to manufacture. This in turn means that there’s a limited number of options you can go to when you’re in the market for a lot of microchips!
When you have a limited number of suppliers, demand is crucial, and nothing changes demand more than one of the world’s largest-ever global pandemics.
As countries went into lockdown, not many of us were buying new cars. That means that orders for microchips were quickly put on hold by leading car manufacturers, whilst orders from mobile phone, games console and other home entertainment manufacturers skyrocketed to meet their unprecedented demand during lockdown.
Throw this forward to when we all want a new car again and as you can imagine, car manufacturers are now at the back of a very long line of people wanting microchips! When you throw in a storm in Texas that affected a key factory and a fire at a Japanese manufacturing plant, some car makers are facing severe delays.
Household names like Nissan, Peugeot, Mazda, Audi and Ford as well as those closer to home like Mini and Jaguar have been impacted by the delay with an estimated shortfall of some 5 million new cars worldwide during 2021. Even companies that had a stash of microchips like Hyundai have suffered.
But what can we learn? Once again, the importance of well informed procurement practices, forecasting future trends and effective stocktaking is highlighted in every industry from global car production to the tiniest independent shop on the high street.
Whilst no one could have predicted the pandemic and its merciless rampage across the planet, retailers and manufacturers with good stocktaking practices already in place have been able to weather the storm better than those that were completely unprepared. Having a good handle on your stock, demand for it, global supply chains and future production trends can help you make the earliest procurement decisions which may help you prepare for whatever’s coming next.
Visit https://www.abacusvaluers.co.uk/our-stocktaking-services or call our team on 01637 874609 to futureproof your business, whatever happens next.