It is increasingly vital that companies understand and plan for many factors that extend far beyond the walls of their company as part of their logistics processes and supply chain management. This includes the entire network of goods, services, entities, people, and information it takes to produce and distribute a product or service to customers. Though consumers rarely think about this process, recent shortages in microchips have highlighted the importance of supply chains in our everyday lives and the need for greater integration of these.
Globalization has caused supply chain management to become more complex as companies strive to remain competitive. Through technology industry is finding ways to respond to market changes and become more productive across all links in the supply chain. This chain includes manufacturers and suppliers, as well as transport providers, warehousing services, retailers, and even customers themselves.
The microchip shortage has revealed how much we depend on supply chains working correctly and how complex and precarious they have become. The shortage, which has affected 169 industries, from carmakers to home appliances, is due to the convergence of many factors. These include supply shortages resulting from increased demand and factory closures in Southeast Asia, labor shortages, and delays in shipping times due to port congestion, among others.
It is predicted that the supply of microchips will begin to normalize in the medium term (as soon as the second half of 2022 and throughout 2023) as investments are made in the factories and infrastructure needed to meet demand, personnel return to work and are trained for this highly-specialized work after the pandemic, and port traffic levels out after the Christmas holidays in the US and Chinese New Year.
With the chip shortage expected to cost the auto industry alone $210 billion in lost sales in 2021, businesses are focused on finding long-term solutions to avoid similar costly breakdowns in supply chains in the future. Two solutions for achieving a well-managed supply chain and increasing profits are integrated supply chains and the adoption of industry 4.0. These concepts allow for a closer alignment and coordination of supply chains and use technology to centralize technology management.
Integrating supply chains means that businesses must focus on understanding and managing the interconnections and interdependence of all its parts. Using purchasing portals as an integrating hub for this strategy, they can bring together data related to all stages of the process. This integration requires the digital transformation of industry across the entire value chain and the networking of machines and processes using technology.
Like many countries worldwide, Mexico is currently implementing its own Industry 4.0 program led by the Ministry of the Economy. The program is focused on developing human capital, identifying high-priority technology areas, including big data, IoT, cybersecurity, and robotics, developing a legal framework for the digital economy, and establishing technological development centers. There are also a variety of transversal initiatives being carried out through public and private coordination, including innovation clusters, with the automotive industry leading the way.
Making investments in technology to facilitate agility and communication between all the links in the supply chain is a long-term solution that will allow companies to become more agile and more quickly adapt to changing markets and unforeseen global events in the future.
By Gerardo González | Guanajuato Regional Director | American Industries Group®
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