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While Americans worry about not getting their holiday gifts in time due to the container shipping backlog, they are also quickly finding out that now is not the time to get a new car, personal computer, or kitchen appliance unless they want to pay a hefty price.
Try finding a new car, or even a used car, and you will find your options are extremely limited and the possibility of negotiating a good price is unlikely. Retail automotive sales dropped 26% in September, while last spring Ford predicted the microchip shortage would cost $2.5 billion by next year. Even the world’s leading tech company, Apple, is not immune to the global supply chain crisis as people ordering iPhones in the UK will wait an extra six weeks, and the new MacBook is delayed in production.
This started with the pandemic causing the global shutdown in 2020, and the surge in demand for technology, especially personal computers and video cameras to conduct business or classes from home. The microchip crisis started in the winter of 2020 when Japan’s major producer of microchips had a fire that shutdown their warehouse causing a break in supplies to the auto industry and customers like Toyota, Nissan and Honda. At the same time, Texas had an unusual and powerful snowstorm that shut down all Intel microchip production for days. These events started a domino effect that we see affecting the supply chain throughout almost all tech industries.
The exposure of the supply chain fragility and multiple areas of weakness validates the need for adaptability, analytics and omnichannel technology as key investments for the future.
Plan ahead with artificial intelligence
Machine learning, artificial intelligence and predictive analytics are tangible solutions for dealing with sudden surprises and future setbacks. Future planning decisions need to become increasingly AI-driven to uncover any hidden vulnerabilities and effectively balance cost and inventory. Get deep insights from your data, interact with customers and employees on their terms, and maximize AI with the IBM Watson suite of products, such as IBM Sterling Fulfillment Optimizer with Watson.
Build up flexibility and visibility
Creating a more agile network by synchronizing systems, processes and communication will help companies be more adaptable and bounce back from future disruptions. Integrating visibility into all aspects of the supply chain will empower employees to make quick decisions for a more agile and efficient workplace. Start connecting people skills, processes, internal networks and external apps to move into a more efficient way of working.
Embrace order promising and fulfillment
Promising enables you to determine the optimal fulfillment based on your business processes. IBM Sterling Intelligent Promising gives enterprise organizations granular control when promising an order to a customer. It also synchronizes with AI-powered sales and demand data to recommend sourcing decisions based on customer choice or cost efficiencies.
What was considered normal in 2019 will no longer be normal in 2022, the outlook is positive as alternative solutions create new options, jobs and even industries. Intel has been building six microchip manufacturing plants in Arizona on a 700-acre campus. Ford Motors is following the lead of General Motors and bypassing their usual suppliers and ordering directly from chip manufacturers. The electric car industry is expected to grow with powertrains as an alternative supply chain solution.
This year has been extreme and manyfold, thrusting the world into chaos and the desire for change. Transformation is necessary starting with reshaping the end-to-end experience with the omnichannel fulfillment model to accommodate new labor and space capacity constraints.
Learn more about the ways that IBM is helping businesses to transform by visiting the IBM Sterling webpages.
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