A discussion about the current state and future of the vehicle supply chain, with Shay Scott, executive director of the Global Supply Chain Institute, and professor in the University of Tennessee’s Master's of Science in Supply Chain Management online program.
Two years into the COVID-19 pandemic, the automotive supply chain continues to face challenges in obtaining crucial parts and building enough cars to meet demand. Even now, major automakers continue to idle selected plants in response to the parts shortage. And general supply chain congestion at ports and elsewhere in the supply chain is affecting all manufacturers. “We’re still in the thick of things,” says Scott.
The problem is nationwide in scope and affects all major producers, even those like Toyota that made large advance purchases of microchips, and was therefore less affected by the shortages in the early months of the pandemic. “You can only lock in so much buffer inventory,” Scott says.
All are feeling the consequences of having drastically scaled back on chip purchases when auto sales plummeted. In response, chipmakers reallocated supply to other customers, such as video game makers.
“We’ve all been reminded how delicate an ecosystem we live in,” says Scott. But the auto industry has learned its lesson. Scott expects the crisis to result in some permanent changes to automotive supply chains, in decisions on where to source parts and final production, and what kinds of parts are needed in vehicles. That could include some reshoring of production from Asia, as well as a substantial redesign of onboard systems even in luxury models.
Still, says Scott, don’t expect relief from the current crunch anytime soon. He expects chip shortages to persist at least until the end of the year, and possibly beyond.
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