Samir Allen Farhoumand has watched the global supply chain issues in recent months with growing concern. Companies are not adapting to the new normal in ways that make sense. This problem could linger for years unless they take proactive steps. Thankfully, he understands many techniques to help with this problem. Companies struggling with supply chain problems can utilize these ideas to avoid financial struggles.
Samir Allen Farhoumand: Tips for Managing Supply Chain Issues
The first tip that Samir Allen Farhoumand suggests is stockpiling in the face of potential shortages. For example, car companies have seen a need for essential microchips throughout the market. This shortage makes it impossible for them to produce vehicles or slows down the process. As a result, people trying to buy cars find themselves waiting for weeks or even months instead of days.
However, Toyota has weathered this problem better than most because they stockpiled chips to help improve their production. This intelligent decision made it easier to keep up with demand and avoid production shortages. Stockpiling is a strong choice in the face of such rare and staggering supply chain problems. However, more common issues may need more persistent solutions.
For example, Samir Allen Farhoumand states that stockpiling isn’t always financially reasonable for companies. Instead, backup capacity may be a more innovative solution. This concept requires shifting your resources to meet higher demands, leaving lower-demand situations unresolved. Let’s stick with the auto industry for a while as we examine how to approach this solution.
Companies like GM and Ford simply stopped making certain car lines and focused on those that were highest in demand. This meant that certain types of luxury or higher-end cars and trucks were not produced or concentrated on this year. Instead, more in-demand SUVs and general use cars received chips. As a result, they could continue production and meet many customers’ needs.
Obviously, this approach has downsides. Samir Allen Farhoumand states that it will cause frustration for many consumers who want that specific product. It may also cut into your profitability. By focusing on lower-end and lower-cost vehicles, GM and Ford could not attract the all-important luxury market. So while this solution helped them stay open, it may alienate those who want higher-quality products.
Day-to-day supply chain problems, such as a lack of drivers, require more short- and long-term solutions. For instance, hiring more drivers may help but could also cause union issues. Improving medical treatment and wages for existing drivers may also minimize shortages but cost companies more cash. Automatic-driving vehicles can also help but are far on the horizon for availability.