Long Term Supply Chain Trends Coming out of COVID-19

2/2/21

Is your supply chain suffering from anticipated part shortages?

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Late last week, Alex McLenon from WDET reported that a global shortage of small electronic parts, referred to as “semiconductors” or “microchips,” could pose a threat to Detroit's auto industry recovery in 2021.

Analysts say an increase in demand, fueled in part by consumer trends during the pandemic, is the catalyst for supply chain issues. They say as new vehicle production slowed to a halt last spring, the consumer electronics industry picked up the automotive sector’s need for microchips.

This is certainly an example of the need for redundancy as a long term supply chain trend coming out of COVID-19. Read more below.

As we come out of the pandemic, it is apparent that certain implications are likely to impact supply chain management efforts over the longer term. Scott Sureddin, a Supply Chain Brain contributor recently shared his thoughts on the three long-term supply chain trends coming out of COVID-19.

  1. Redundancy. Supply-chain managers now have a greater appreciation for the need to reduce the risk of out-of-stock events and disruptions. Redundancy has become a key topic, and will continue to be a priority even as operations normalize. Third-party logistics providers are well-positioned to supply redundancy through their resources, infrastructure, and engineering capabilities.

  2. Near-shoring. Many, but not all companies, are moving toward near-shoring to avoid the 2020 inventory disruptions. This will push companies and their supply-chain providers to seek higher efficiencies through technology, leaner inventory and network design, offsetting increased costs in warehousing and labor.

  3. Resilience. Visibility and real-time monitoring of risk have always been important, but the appetite to invest explicitly in these tools was limited. As we enter 2021, the business case for resilience is at the forefront.

For Detroit automakers, many are starting to take steps to scale back overall production due to the global shortage of small electronic parts where redundancy is not option.

As a supply chain professional, what trends are most likely to impact your company over the long term and how are you planning for them? Send us your thoughts at arollins@apicsdet.org. We'd love to hear from you and possibly feature your company in one of our upcoming blogs!

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Looking for a chance to network and share infomation with other local supply chain professionals? Join our next Supply Chain Community Connect session scheduled for Tuesday, February 16th from 12:00 pm - 1:00 pm! See below for more details.