Digitalising Management, Processes and Resources - MST’s Response to the Silicon Chip Shortage
A major challenge in the IT Infrastructure world is the shortage of silicon chips (semiconductors) that power all sectors of hardware today. This challenge emerged in early 2020 and has strained global component availability for over 3 years. “To cope with some of these challenges most mid sized & large TPMs are using multiple tools including ticketing systems, and paying though the nose for licenses on an average of USD 22-25 per user.
Digitalisation has become critical to effectively manage business and keep track of profitability in each project, while delivering effective services adhering to SLA set.” - Amit Raje
Background on the Global Situation:?
Silicon, Silicon Everywhere, not a chip to use
The last few years has seen huge scarcity in silicon chips and semi-conductors that has hit IT Hardware industries hard. Silicon is one of the most abundant elements on Earth. Silicon chips and semiconductors however, have an extremely specialised production process and only a few centres in the world manufacture them. Setting up manufacturing facilities for these chips cost Billions of dollars and take years to set up. There were other factors like present day geo-politics to also consider; but when supply and demand fell out of balance during the Pandemic, the current shortages emerged.??
Post COVID?
The COVID 19 Pandemic saw a shift to remote and hybrid working. The electronics and computer chip requirements sky-rocketed, while demand fell in sectors like automobile manufacture. Postpandemic, there was another shift in demand which production could not meet fast enough. Manufacturing centres couldn’t keep up and shortages in semiconductors affected the IT Hardware industries to varied extents, the automotive industry being most effected. For the IT hardware industry, the supply chains were affected.?
Stretched Hardware Ecosystems?
“There is a trend emerging, where OEM product delivery is getting delayed due to the impact on the Silicon Market, stretching some of the products’ delivery from 26 to 50 weeks. In this situation, Silicon suppliers find it hard to get the full advance to book the production of silicon & there are heavy cancellation charges if last minute delivery is cancelled. Due to this, OEM’s have begun demanding support and end to end security from their end Clients (In some cases TPMs), and are also demanding at least a 40 to 50% advance for their product.
TPM businesses are majorly a high turnover, low margin set up. These constraints from OEMs are impacting finance charges and further depleting margins. TPMs are now relying more and more on AMCs to keep business up.” -Amit Raje?
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The Actions That Can Be Taken:?
The Circular Lens and Sustainability?
The current chip shortage is predicted to continue into 2023. But beyond the challenges of present day lies the future task of shifting processes to sustainable, zero waste frameworks. This could be the opportunity to start building the infrastructure and processes that will ultimately secure us against shortages. In the context of component supply, the use of refurbished parts and second-hand servers, as well as a greater shift to repair over replacement is a way forward.?
The MST solution for service providers – Digitalise and Automate management?
In an unpredictable market, optimizing the management of processes and resources through digitalisation and automation tools, can prepare organisations to better respond in critical situations, and better predict requirements by watching data trends.
“MST presents an integrated ERP solution which has multiple modules that are interlinked to each other, to enable the right decision making by service providers, in managing their tendering, supply chains and resources. MST ERP has dashboards for regional as well as global management across the board, to keep teams up to date, enable them to manage escalation and communicate effectively with their customers, ensuring customer satisfaction. On our platform, the data is fully secured, features and analytics are customisable per the organisation’s needs and business focus areas.” -Amit Raje
This article is based on excerpts from the whitepaper "MST ERP Tool for TPM Business" written by our Head of Software Development, Amit Raje. Look out for details on this solution in the full ERP Whitepaper, which will be released soon. MST ERP is currently under development. Watch this space for more updates.
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