Procuret Blog

When the Chips are Down, Where Can You Turn?

Michael Nguyen

It is fair to say many Australians have access to nice creature comforts in their own home. We don’t even need to step outside the house to receive the products and services we want.

Convenience is reaching new heights as online ordering and quick delivery puts any kind of online shopping, food & entertainment experience within easy reach. Patience might not be our virtue, but for suppliers and retailers working in the instant gratification era, it’s not as easy...

There simply is no room for error for poor customer experiences. This constant need for instant satisfaction (reward) is making customers perpetually impatient. It’s also putting phenomenal pressure on many industries to gear up and serve customers faster.

The conveniences we enjoy in our personal lives have set the standard for how businesses engage with each other. With technology advances, businesses are able to purchase what they want, when they want it! This has allowed them to make tactical decisions faster, curate purchase choices, and have products tailored to their specific taste, speed and ethical expectations.

Proverbial Speed Hump

Recently, supply chains have come under immense pressure due to the two year long pandemic. The dichotomy is that the technology industry remains at the forefront of what is needed to support remote working arrangements, however, not everything can arrive when it is needed to drive the economy forward.

Through my role as a Partnership Manager, I get to speak candidly with Information Communication Technology (“ICT”) suppliers, distributors, resellers and managed service providers. ICT Suppliers are finding it especially challenging to fulfil hardware orders for SME clients. SMEs want to place orders and spend capital, but stock and component delays have caused disruption in the procurement of ICT goods needed to run a business effectively.

Uniquely, the supply issue is primarily caused by the shortage of semiconductor chips. This shortage began in 2020 and has continued through to 2021.

Semiconductor chips, also known as microchips and integrated circuits (ICs), store data and programs on computers and data storage devices. They are essential components in everyday electronic products, such as mobile phones, gaming consoles and televisions. Manufacturers of larger electronic devices such as computers and motor vehicles also require this chip for their products.

ICT partners have shared that items such as USB telephone headsets, modems, routers and laptops continue to be highly sought after by SMEs. The limited stock issue, not only sits with ICT suppliers, but is now hitting national electronic retailers such as JB Hi-Fi, Harvey Norman and The Good Guys.

A closer look, and you soon realise that this global issue is likely going to continue until at least the first half of 2022 - impacting businesses and employees confined at home, working remotely and in need of technology upgrades.

There are only a small number of chipmakers across the globe and most supplies come from a single company in Taiwan called TSMC. Last month, it was reported that with the exceeding increase in demand for microchips, TSMC grew to become Asia’s most valuable firms in this sector, overtaking Chinese Tech giants, Tencent and Alibaba.

No time to panic

Other than waiting in queue for new stock, there is the option of acquiring pre-owned or refurbished hardware as a stop gap. This isn’t the worst option as it takes away one less worry for businesses battling to overcome this unprecedented challenge.

If you can wait it out, there is light at the end of the tunnel. Thankfully, the chip cavalry is on its way! In July and August, I was told by some supplier partners that backorders from prior months had been finally filled.

Australian SMEs are resilient, have adapted, and are patiently waiting for their orders to be filled. Outside of the ICT industry, I am sure there are stock issues in many other industries across Australia.

Have you experienced any recent supply driven issues in your network, and how did you get around the short term problem?

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