The automotive semiconductor shortage has caused many businesses and organizations to face challenges with production such as cost of goods sold and profitability. As semiconductors are a key component in vehicles, their shortage has caused a substantial disruption in the supply chain. To address this issue, vehicle manufacturers should consider taking a number of steps to navigate the issue, including the following.
Be Transparent About Sales Issues
According to data from Wards Intelligence, the number of vehicles in dealerships was down 26% in February 2021 compared to February 2020. As semiconductors are used in automotive production, this is an immediate result of the semiconductor shortage. Companies should be transparent with customers about any sales issues they are facing, so customers can make an informed decision on their purchase. For example, if sales of a particular product line have been impacted by semiconductor availability, explain this to the customer so they can make an informed decision.
Proactively Reassign Production Resources
Given the semiconductor shortage, companies should consider reallocating resources to maximize production efficiency. This could include moving production to other countries, if feasible, and reallocating semiconductor resources to prioritize certain products over others. Companies should also look into ways to reduce semiconductor use, such as simplifying product designs and introducing alternatives to semiconductors, if feasible.
Conduct Cost-Benefit Analysis Before Making Decisions
Before making any decisions regarding automotive semiconductor use and production, companies should conduct a cost-benefit analysis. This involves analyzing the costs and benefits associated with any proposed changes, including potential cost savings and any potential risks. This will help companies make the best decision for their business while navigating the semiconductor shortage.
Develop Relationships With Reliable Suppliers
Companies should also consider developing relationships with reliable semiconductor suppliers that can provide semiconductors on a regular basis, even during times of shortage. Developing relationships with semiconductor suppliers can help ensure that companies have access to semiconductors when they are needed most. Companies should also consider diversifying their semiconductor sourcing to ensure they can access semiconductors even if one or more suppliers are facing a semiconductor shortage.
The current semiconductor shortage has caused considerable disruption in the supply chain and customers may find themselves waiting for a specific type of vehicle for a couple of months longer than they may have expected. To navigate this issue, companies should be transparent with customers about any sales issues they are facing, proactively reassign production resources, conduct a cost-benefit analysis before making decisions, and develop relationships with reliable semiconductor suppliers.
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