Supply and Demand: Strategies for Dealing with Chip Shortages for IT

Long Lead Times for Computing Technology Require Planning and Adaptability

The Covid-19 pandemic has caused another worldwide pandemic of shortages. If you’ve tried to purchase a vehicle, appliance, or computer over the past year, you know about the supply challenges. Unlike the issues with toilet paper, hand sanitizer, pool chlorine, and lumber, the cause of the problem affecting technology manufacturers—whether they be cars, refrigerators, or computers—is not price gouging or panic buying. It’s chip shortages.

As a provider of managed services throughout North America, Northriver IT has seen how the semiconductor chip shortages have affected manufacturers and their customers in all industries that rely on their products. And we’ve developed successful strategies for businesses to get the technology they need to maintain productivity.

Chips: Tiny Components with Big Jobs and High Demand

According to this article:

“Chips” are small, flat pieces of silicon with electronic circuits on them. They function as tiny electrical switches that turn on or off the flow of electricity. Also known as semiconductors or microchips, these silicon wafers can each hold literally billions of transistors on them, and they are indispensable components of the electronics-based world in which we live.

Given the staggering amount of electronics using chips, demand exceeded supply even before pandemic shutdowns. Manufacturers are ramping up production, but the pandemic and remote work have also increased demand, leaving businesses with three to four-month wait times for much-needed devices and equipment. Gartner reports that the PC market is seeing its fastest growth in two decades, and that’s continued into 2021.

Chip Shortages Affect Businesses of All Sizes

Ordering equipment for new hires, replacing malfunctioning equipment, and supporting end-of-life IT needs has become onerous. Suppose a small business like a construction firm has several bids out for work and experiences technology shipping lags. When employees don’t have the needed technology to begin work on-site, managers might need to delay projects or even lose projects altogether.

Big businesses are also experiencing big problems with chip shortages. Take this tidbit shared in The Economist as a sobering example:

Carmakers, whose products have become computers on wheels, are among the victims. Profits at Ford, America’s second-biggest carmaker by volume, fell by half in the most recent quarter amid a global shortage of chips. Analysts say the industry might build around 5m fewer cars this year, all for want of their tiniest components.

What can businesses do to maintain productivity during the shortage?

1. Extend Projections and Order Early

Small businesses typically order one to three computers one to three weeks before hiring new employees or replacing obsolete equipment. With manufacturer lead times stretching into several months, companies need to project their needs out to ensure new employees have computers when they begin work or existing employees’ have replacement computers should their devices malfunction.

Companies should also increase their IT budgets to accommodate the increased price this low-supply: high demand scenario has created. “The global semiconductor shortage and subsequent component supply constraints have extended lead time for some enterprise mobile PC models to as long as 120 days,” according to Gartner. “This has led to prices increasing in the bill of materials, which vendors have passed on to end-users.

2. Consider Multiple Manufacturers

Northriver IT monitors supplies closely with various manufacturers and can confirm that no manufacturer is immune to shortages. However, our relationships with several manufacturers and diligence in monitoring stock enable us to meet customer needs as long as we have sufficient notice.

The shortages thus far have played out like rolling blackouts where some manufacturers have supply at times and not at others. Business IT teams may need to widen their manufacturer preferences to meet business needs. Of course, more manufacturers in the mix bring support challenges, but it’s a sacrifice between immediate productivity and support down the road.

3. Be Adaptable

One of the first questions we ask when working with customers to determine computing needs is how will the technology be used? Use determines storage, power, etc. However, with the shortages, businesses often have to adapt temporarily to what is available.

For example, most employees favor dual monitors, requiring USB-C connectors. These connectors are one of the low-stock items. We have developed a workaround for our customers to use a type of screen that supports USB-C docks, and we steer orders to models in stock. It’s a daily exercise to determine which models are stocked and can ship within needed timeframes, but it’s exactly that type of creativity that has maintained productivity for many companies.

Another potential solution is using a virtual desktop infrastructure that gives employees a PC-like user experience on tablets and even mobile phones.

4. Work with a trusted Managed Services Provider

Ordering the right technology for business needs can be a challenge during ordinary times. Under current conditions, most businesses don’t have time to wait for stock to be replenished, monitor the continually changing availability during this shortage, or adapt selections based on manufacturers’ availability.

Northriver IT advises customers on navigating these availability issues and helps customers take strategic action, so they aren’t making reactive last-minute decisions, whether for computer equipment or other IT managed services.