Background of semiconductor shortage and supply chain vulnerabilities
The ``semiconductor shortage’’ that has cast a large shadow over the world economy in recent years has highlighted how dependent modern industrial structures are on advanced electronic components. Semiconductors are indispensable not only for smartphones and computers, but also for all products, from automobiles to home appliances and industrial machinery. This unprecedented supply crisis was caused by a complex interplay of multiple factors, including rapid fluctuations in demand due to the coronavirus pandemic, export restrictions due to geopolitical conflicts, and natural disasters and factory fires.
What this crisis has revealed is the ``vulnerability’’ of globally constructed supply chains. It has become clear that the just-in-time approach that pursues maximum efficiency and the concentration of production in a small number of foundries (contract manufacturing companies) in specific countries and regions (particularly in East Asia) have maximized the risk of supply disruption in emergencies.
Corporate strategies to strengthen resilience
Based on this lesson, companies are shifting their strategies to strengthen the resilience of their supply chains. The first countermeasure is to diversify procurement sources (multi-sourcing). There is an accelerating movement to reduce dependence on specific countries or suppliers and secure multiple geographically dispersed procurement routes, even if this means accepting increased costs.
Additionally, we are moving away from “management without inventory.” This is a shift to a “just-in-case” approach that strategically builds up safety stock in preparation for uncertainties in demand forecasts. Furthermore, in order to improve the transparency (visibility) of the entire supply chain, systems are being introduced that utilize IoT and AI to monitor and understand the end parts supply chain, such as Tier 2 and Tier 3, in real time.
At the national level, from the perspective of economic security, there is an increasing movement to invest large sums of money in subsidies to attract semiconductor factories to the country and rebuild the manufacturing base. For companies to constantly monitor geopolitical risks and have the agility to flexibly reconfigure their supply chains in the event of an emergency, it will be essential for companies to maintain their competitiveness in the future.