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Chips, resignations and outdated infrastructure: Supply chain challenges are ahead

Too many supply chains lack global resilience and are breaking down. How can businesses prepare?

White House channels infrastructure funds to snarled ports
Snarls at American ports have exacerbated supply chain woes that are threatening to wreak havoc on the 2021 Christmas shopping season - Copyright AFP/File Hector RETAMAL
Snarls at American ports have exacerbated supply chain woes that are threatening to wreak havoc on the 2021 Christmas shopping season - Copyright AFP/File Hector RETAMAL

How will supply chains evolve in 2022 and will the challenges around semiconductor finally shortages be addressed? This is perhaps an issue of more hope than reality as challenges are set to continue.

To gain an insight into supply chain dynamics, Digital Journal caught up with Mark Adams, CEO at SGH.

Semiconductor constrains

For those who are reliant upon semiconductors and who have grappled with the supply shortages across the year there could be no respite in the year ahead. According to Adams: “I fully expect current constraints on supply chains and specifically as it impacts the semiconductor industry to continue for much, if not all, of 2022, with possibly some easing to begin in Q4 ‘22 or early ‘23. We’ve seen a 30-plus year decline in U.S. semiconductor manufacturing.”

Moving onto a more parochial U.S. perspective,  Adams continues: “The current situation has exposed our vulnerability in so heavily relying on overseas manufacturers. It has also underscored the importance and critical opportunity to reinvest in this industry, uplevel domestic production and increase self-reliance.”

For the U.S. economy to proposer in relation to semiconductors, Adams offers a few strategies that may help mitigate the current constraint:

  • Funding Incremental Capacity Investments (but careful not to swing too far to over-supply market conditions)
  • Requiring NCOs (Non-Cancel-able Orders) from customers to avoid double/triple ordering 
  • Leveraging AI/ML in the area of yield improvement and quality

In other words, Adams believes semiconductors can be a catalyst for a renaissance in U.S. manufacturing. 

U.S. infrastructure

Moving to politics, Adams looks at recent legislation – the signing of the infrastructure bill. Adams sees this as triggering “a massive boon for U.S. economic recovery, and  manufacturing stands to benefit significantly”

There are caveats. Adams cautions: “It remains to be seen where and how widely the manufacturing investments will be made—and whether they will help the country withstand some of the supply chain challenges that have become so prevalent over the last year.”

Looping back to his earlier comment, Adams notes: “With semiconductors at the center of discussions, an investment in manufacturing them domestically could mean less reliance on foreign silicon, more control over supply chains and, ultimately, a speedier economic recovery. Rebuilding domestic semiconductor manufacturing will be a significant lift, but thanks to the infrastructure bill, the process starts in 2022 and establishes the foundation for a more economically self-reliant country going forward from there. ”

Skills gaps

Adams is concerned that the “great resignation” is a trend that is here to stay. In other words, it is “Not the one-time event some organizations believe it to be. Organizations will need to double down on efforts to serve a larger purpose, while demonstrating that they value not only their employees but the world, or they will be hit disproportionately hard.”

Furthermore, Adams finds: ”The magnitude and experience of COVID have placed a premium on values and employees will no longer stay at a job just for a paycheck. Diversity and inclusion, along with broader ESG initiatives will no longer be “nice to haves.” They will be “need to haves,” or the consequences for organizations will be dire ”

Written By

Dr. Tim Sandle is Digital Journal's Editor-at-Large for science news. Tim specializes in science, technology, environmental, and health journalism. He is additionally a practising microbiologist; and an author. He is also interested in history, politics and current affairs.

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