We have all heard about the struggles auto and computer makers are experiencing as the chip shortage continues to impact them. And the shortage is impacting many other industries as well.
So, what are these chips? Well, we are not talking about potato or corn chips. They are semiconductors, which are integrated or monolithic integrated electronic circuits. They basically function as on-off switches that allow electricity to flow. Semiconductors or chips are found in a variety of items, including laptops, smartphones, TVs, washing machines, dryers, thermostats, and microwave ovens.
Modern manufacturing equipment has central processing units (CPUs) that perform mathematical and logical operations as well as other control functions. I can’t think of a manufacturing segment or process that doesn’t rely on a chip in some way. They are everywhere. As a result, there is a risk that the worldwide chip shortage could impact even more U.S. manufacturing industries.
If your manufacturing company relies on machinery and equipment that uses semiconductors, what can you do?
I recommend that you assess which equipment is critical, identify whether a chip failure could render that equipment out of service, and decide if you should order spare chips or circuit boards. You can use your equipment history, including data from your preventative and predictive maintenance log, to see how often a chip has caused you to shut down a piece of equipment. This data can give you a good understanding of what will happen if a chip fails.
If you decide to order backup chips from the OEM and find they are out of stock, ask about alternative chips from different manufacturers that can be used. If there are no alternatives, see if you can buy them from a used equipment dealer, a machine scrapyard, or eBay. After that, your options are slim, as chips are specifically designed for a certain function within a machine.
If you have ordered new machines, I recommend checking with the supplier to see if they are on track with the project or if they are expecting delays. If they are behind, there is not much you can do. Depending on your situation and the equipment, you may be able to increase capacity by subcontracting some of your work or scouring the used market for a machine to use in the interim.
I believe that having a solid understanding of your supply chain and the machines and equipment you need to keep your operations going can give you an edge. Paying close attention to your supply chain and potential issues, like extended shutdowns and transportation bottlenecks, can give you a head start on ordering critical items before a run starts. Good forecasting and strategic planning can also help you identify potential capacity and equipment needs early, allowing you to place orders before a crisis happens.
To be successful within the manufacturing industry, it is important to stay on top of the overall industry as well as your own production goals. One of my mentors used to say, “Keep your ear to the ground, your eye on the horizon, plan for the most unlikely case, and you might have a chance of a good night’s sleep.”