Is there anything else to discuss other than the chip shortage? It’s getting as much press as The Pandemic. Growth in EVs, deployment of 5G stations, and record WFH-induced demand for PCs has shifted the demand curve to the right. Meanwhile, winter storms, fires, and the festering trade war have all contributed to stunt the supply of everything from the chips to the wafers, and ingots.
It seems to have taken automotive manufacturing to grind to a halt for the chip shortage to gain attention. Once it did, the reports came flooding in. Manufacturing an integrated circuit is one of the most complex manufacturing processes that exists. Supply chains supporting that production and distribution are just as complex. The demand may even be building, like latent energy, waiting for a return to “normalcy” in our daily lifestyles. How long will it last? A top communications manufacturer predicted this situation would last six months – perhaps the privilege of being near the front of the allocation queue in the VIP lane. Other reports are projecting as long as 2023. Lead-times might give a roadmap, and they are from 26-52 weeks, meaning that between six and twelve months from now, orders placed today will be fulfilled. Allocations are channeling capacity up and down the supply chain to “the most critical” industries, so commercial applications will likely fall into the group that is getting choked off. We got a six-month lead-time for a printer!
At least, some good has come from this – manufacturing has learned there are hidden gems in excess and surplus inventories, they just needed to remember to look in the closet. And there are a lot of closets. But those stocks will also run out, which leads us to the really bad effect of this scenario, which is the substandard and counterfeit product being pushed into the supply chain. Wire fraud (prepaying for phantom inventory) has become commonplace. This is not really new, but there are now plenty of buyers who are unfamiliar with these risks and look to sources that experienced buyers don’t even go to.
As we did see during the early stages of the Pandemic, crises drive innovation to solve problems caused by the crises. In 2020, we learned how to work, and care for each other, remotely. We learned to work more closely together, even when apart. We adopted available technologies and learned how to use them within our organization and to meet our objectives.
This year we’re advancing our forecasting models and breaking new frontiers of efficiency and optimization. Lead-times were already a primary objective for us heading into2021, and while we fell behind in April and May, the work that has been done to increase capacity since March began to show itself in June. The reality showed itself in simple but cruel mathematics – a job takes this long to do, this many people available to do it, when there are more hours required than are available, it takes longer. Add more hours available and reduce the hours required through efficiency gains.
Brute force overtime was the first step, and at White Horse, we continuously admire how our team has handled the extended hours over many months. Good people do what it takes and help each other do it. Recruiting, hiring, training, and mentoring –in the short-term that takes time. It takes months to find the right people, train them to the point they can work independently, then their output begins to ramp up and have an impact on the order schedule. The (ongoing) efforts in March,April and May surfaced in June. We even managed to move the bottleneck.
Just like workforce planning, digital and mechanical automation takes time to bear fruit. And time, as the saying goes, is essential. In June, thanks to staffing and technological adjustments in the company, we already succeeded in reversing the trend and significantly shortening lead times. We will continue to drive this development forward in the third quarter. Look forward to further steps towards personnel and technological excellence, we will be happy to keep you informed.We have learned to do things in new ways, making use of technologies that facilitate remote working such as virtual audits and cloud-based test programming. While we have been weakened by fatigue and concern for family and friends, we were strengthened in our care for one another and our determination to get it done. Despite the uncertainty, we stayed true to our equipment investment commitment and even managed to grow by 20% supporting industries vital to fighting the virus and it’s affect on society. So many others have faced so much worse. We are truly fortunate and grateful.