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Why global supply chain disruptions won't get better soon

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New Delhi, Oct 28 (IANS) What began as cleaning supply and home office technology shortages have since expanded into delays and scarcity for everything, from consumer appliances and electronics to automobiles in the pandemic.

According to global market research firm Forrester, more companies are revealing that these shortages are prompted by disruptions in their Tier 1 or downstream supply chains, and it’s not likely to get better anytime soon due to systemic risk.

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“Systemic risks do not take turns; they often trigger one another and can materialise all at once. To fix the problem, businesses must understand the top systemic risks shaping global supply networks,” said Forrester senior analyst Alla Valente.

Semiconductor chips have become the basic ingredient in a wide variety of products. They include automobiles, a market the media has been highlighting as the ‘poster child’ for the chip shortage.

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“The impact extends far beyond autos, home appliances, consumer electronics, medical devices, farm equipment, and even toys. It is hitting corporate IT hard, as data centre equipment, cloud services, PC, and even Apple struggle to get these essential parts,” said Vice-President and Research Director Glenn O’Donnell.

If you cannot get aluminium, you cannot make chips; if you cannot get sand (raw silicon), you cannot make chips.

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“Chipmakers are increasing capacity substantially, but they just kicked off this supply repair process, which takes a minimum of two years. An ample supply of chips will not come until well into 2023, perpetuating the electronic supply chain for another two years or so,” O’Donnell predicted.

In the spring of 2020, it was toilet paper and hand sanitiser. Last holiday season, it was the PS5.

This year, anything that does not make it onto shelves could be a beacon for the automated software programmes or bots, which means that people already paying higher prices for food and gas may be forced to pay markups for hard-to-find hot gifts or everyday essentials.

“The good news is that retailers can mitigate this risk to their customers with effective bot management tooling: as you anticipate upcoming shortages, expect bot activity to expand,” said principal analyst Sandy Carielli.

“As supply chain disruptions continue, be prepared for bot operators to take advantage of any shortages,” the report noted.

–IANS

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