Chip is an essential commodity that is keeping the technological world operating. There is a high demand for the product, but on the other hand, supply chain shortages have become a global issue that has affected production.
This shortage has significantly affected the automotive industry which is a big beneficiary of chips. For instance, chips are used in most of the features of the car that are used in Wi-Fi hotspots. As such, this shortage has resulted in a slow production process or production of products that do not meet the expectations of the customers.
To fill in the gaps witnessed in the supply chain, manufacturers have resorted to using independent distributors to improve the lead times for delivery. The same strategy has also helped in maintaining costs and also minimizing the risk involved or keeping them at fixed levels when compared to the traditional supply methods.
The independent supply chain has been a significant milestone for many companies because of the gains obtained. Some have considered using this type of supply chain from the word go because they understand the complexities involved in supply distribution.
The vice president and general manager at Classic Components, Mike Thomas, reiterated the new route that companies have taken and acknowledge its importance.
Meanwhile, Calif, who is an independent distributor also noted that some companies have lagged in this new idea because they are afraid that their customers might also consider the open channel, which might have adverse effects on these companies.
During the pandemic, the industry was aware that the demand for people buying cars will decline and therefore amended their forecasts appropriately. For instance, they concentrated their supplies on consumer electronics as they anticipated a decline in the automotive sector.
Nonetheless, the demand for automobiles has taken a higher notch leaving the industry with a huge gap to fill especially in the supplies.
Thomas has projected a steady rise in the demand for chips in the automotive sector for a significant period.