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31 Aug 2021

Global chip shortage: Why project planning needs to start now

There’s been a lot of talk recently on the global chip shortage, and as well as the tech industry, it’s affecting multiple other industries in the supply chain. With demands surging and orders being constantly placed, a lot of strain has been put on suppliers, and they’re in an endless battle of prolonged orders. The shortage is expected to continue into 2022, any businesses looking to plan for the new year must start now to get ahead of the game.

The impact of the global chip shortage on technology procurement

So why is there a global chip shortage? The short answer…COVID-19. A crisis that has undoubtedly caused disruption globally in one way or another. And it’s no different when it comes to chips. The pandemic forced everyone to quickly start working from indoors, resulting in demand for laptops, desktops, mobiles and other computer accessories to skyrocket. The PC market alone is projected to be 45% bigger than initially expected. The increasing demand meant that chip manufactures simply couldn’t keep up, hence the backlog in chips, and further impacting suppliers to be able to deliver to procurement teams on time.

Cloud computing services is also something that many businesses begun to invest in over the pandemic. After all, it made their business more agile and efficient whilst aiding employees to successfully work remotely. Many cloud providers use a lot of semiconductors, and with the huge demand of cloud services, comes a lot of orders of semiconductors. But according to Gartner, the semiconductor shortage is expected to last until at least the second quarter of 2022, so if you’re considering cloud service, its best to get the conversation going from now.

And to cut a long story short, if you’re thinking about ordering some supplies that either have a battery or a plug, the chances are these products are already in backlog and suppliers are battling to get these orders moving. There’s also a lot of demand for switches, firewalls, and monitors, but the issues that lies is that there simply is more of an exponential demand than supply.

Staying ahead of the game: Why procurement project planning needs to start now

Restrictions have eased and many businesses have begun to transition into the hybrid model working, whilst others continue to support permanent remote workers with the appropriate equipment. This has been putting leaders under pressure to ensure workers are supported.

If your business is also transitioning, and you still haven’t put in your order with your procurement partner, then now is the time to take action. Like we said, there are still backlogs and the shortage is expected to continue into next year. Our team are seeing a lead time of up to 6 months on switches and firewalls alone, but there could be more delays due to constant push backs. Dells CEO, Michael Dell has even stated that “the shortage will probably continue for a few years”.

It’s important to note that if you’re still not partnered with a procurement team, then its high-time you do so. You need a partner that you can rely on and listen to your needs, especially now more than ever with the chip shortage. Procurement teams also are extremely busy working on increased demands and a backlog of orders. If you need to start a procurement project, it’s best to get in line now and start discussing your requirements!

To get started with your procurement project, contact our team today.

By OryxAlign

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