As the world battled the COVID-19 pandemic and millions of people were instructed to stay home, the demand for electronic devices like laptops increased. At the same time, Apple released a new iPhone and many games consoles like Microsoft’s X Box sold out. Technology companies like these tended to stockpile microchips to ensure that they could keep on selling their goods as demand increased.
Other businesses, like car manufacturers saw a drop in demand for their products, so they stopped ordering parts including microchips. Many car plants work on a just-in-time basis, with vehicle components scheduled to arrive exactly when they’re needed on the production line. This saves car makers the expense, space, and additional handling needed to store millions of parts.
But when the demand for vehicles began to bounce back, they found that they couldn’t get hold of the chips that act as the brains of a vehicle. The microchip manufacturers were already working full tilt and struggling to catch up with lead times after the disruptive weather. Which meant that the chips they were producing took longer to reach some customers, including the car plants.
Companies including BMW, Jaguar Landrover, Honda and Nissan were forced to stop production lines of certain models for a time. Those stoppages will no doubt impact business profits, not to mention their wider effect on the country’s economy and the brands’ reputations.
The latest in a long list of supply chain issues can be seen as a warning that no business is immune to supply chain disruption. What can you do to prevent it from having an impact on your business?