Navigating the Global Chip Shortage with Location Intelligence

August 16, 2021

The COVID-19 pandemic has caused many unprecedented shortages in the supply chain, but the most widely felt is the semiconductor shortage. The semiconductor shortage has impacted many different industries, from automotive to gaming, and even the cell phone industry. This is delaying assembly lines and even causing them to stop completely. With data and advanced analytics, this shortage could have been prevented to a certain extent but it’s time to look towards the future.

Here is how location intelligence can help companies navigate the global chip shortage. 

Navigating the Global Chip Shortage with Location Intelligence

Expand Manufacturing Capacity to Increase Chip Production

Despite the chip shortage, many companies are taking matters into their own hands and extending their supply chain network with new facilities– or foundries– to meet increased demand. The cost of these endeavors can be astronomical but location intelligence can help organizations cut expenses in the process. 

Location intelligence can help companies select the right location for their foundries. Places where transportation of their goods is as seamless as possible and would make obtaining their self-produced chips much easier.

For example, an organization is in the process of vetting a location for its new foundry. The process has been tedious because of the costs involved in purchasing or renting a place. The company almost settled on a location that was the right size and the right price over another one that was a little bit smaller and slightly more expensive. By using location intelligence, they were able to determine that the cost of transporting the goods would be more if they chose the cheaper location than the other one that is a little bit more expensive but away from higher traffic areas.

Inventory Planning

A large cause of the chip shortage was the uptick in consumer demand at the end of 2020. Companies were largely caught off guard and had to scramble when their stockpile of semiconductors wasn’t what it should have been. Insights from location intelligence provide organizations the data that they need to keep up with demand. 

If location intelligence was being utilized by an automotive manufacturer, for example, they would be able to prioritize supply areas in the U.S. that are seeing significant changes in consumer behavior towards products that rely on chips. In this way, location intelligence can help inform inventory planning for that manufacturer.

Address Supply Chain Bottlenecks

Creating chips is complicated, sometimes taking up to 26 weeks. In addition to this, distribution is also a lengthy process, especially when suppliers are not domestic. By enriching sales data with location intelligence, organizations understand potential roadblocks in their fulfillment processes and reduce lead time throughout their supply chains. 

For example, if a supplier is experiencing more truck traffic and a long dwell time with low sales in a particular trade area, this may indicate that the organization needs to reach out to the supplier to determine what the cause of delayed distribution may be. Location intelligence can also help organizations understand the business activity of potential domestic suppliers based on business activity, including employee and truck foot traffic, or time of day, or day of the week. If the business finds that this potential supplier would fit into their supply chain, then they can reach out. In this way, organizations can invest in a new supplier that would fit into their current supply chain.  

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