Component supply rebounds in Q2

Though it’s impossible to eliminate supply chain risk, chipmakers can take steps to mitigate their exposure. Recently, businesses spend management (BSM) platform Coupa published a paper offering different tips on how organizations can minimize supply problems. Accordingly, here are three ways firms operating within the semiconductor industry can utilize their insights.

Partner with Vendors that Use Automated Compliance Verification

Since the early 1970s, SEMI has provided the components industry with a series of global standards regarding the production of semiconductors. Thanks to the organization’s work, there is a uniformity of expectation in production that facilitates consistency on a worldwide basis. The group’s standards also offer manufacturers a degree of protection against corporate malfeasance.

Failing to abide by regional environmental, health, and safety standards can result in significant penalties and fines. As a result, chipmakers can be left reeling if one of their suppliers is discovered operating out of compliance. For that reason, component manufacturers should endeavor to work with vendors that utilize compliance verification platforms.

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Today, suppliers can use Internet of Things-integrated compliance software to ensure that their equipment and facilities meet all applicable standards. Furthermore, automated compliance verification systems make the auditing process much more straightforward by performing data collection and collation algorithmically.

Manufacturers that partner with vendors that employ automated verification systems can reduce their risk of unexpected supply chain disruption.

Maintain Business Intelligence Resources

Semiconductor companies should also protect themselves from supply chain problems by maintaining business intelligence resources.

For instance, let’s say a U.S. chipmaker provides components for a Chinese electronics maker. If either companies’ government imposed a new import or export tax on semiconductors, the manufacturer’s supply chain would be much more expensive. As a result, the Sino corporation might decide to source its parts locally after the levy becomes active.

But if the American manufacturer regularly updates itself regarding industry news, it could take steps to preserve its international deal. But to do that, firms need daily updates on the rapidly changing global commerce landscape.

Similarly, component makers should be aware of new litigation, government investigations, trade bans, negative reviews, and facility contaminations that would affect their supply chains. While every business should disclose that information to its partners, the reality is that it doesn’t always happen. Consequently, chipmakers should protect their interests by availing themselves of trustworthy business intelligence resources.

Improve Supply Chain Visibility

Another way semiconductor manufacturers can lower their supply chain risk is by improving their supply chain visibility.

One proven way to achieve that goal is to use a quality BSM platform. With such software, users can collate all the business intelligence they have to assess their vendors’ risk factors. Moreover, companies can use that data to determine if they need to pause a relationship, renegotiate terms, or find an alternate supplier.

Because BSM platforms can integrate and manage a wide range of inputs, they are much more efficient than a whiteboard or digital spreadsheet. Besides, software solutions can provide critical data insights that can help firms proactively deal with supply chain problems. Indeed, chipmakers owe it to themselves to forecast such issues before a crucial shipment fails to materialize.

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