Chips operate like parts of a brain, communicating with other component parts to control anything and everything from digital displays and cameras to automatic transmission and emergency braking.
They are manufactured in dedicated and highly specialised factories, under very clean and controlled conditions. Demand often outstrips supply at the best of times.
Even small delays or slight interruptions to either the manufacturing process or supply chain can lead to large backlogs of orders. Over the past year or so, the manufacture of chips has been thrown into confusion and hit hard like never before.
When the country first went into Lockdown as a result of the COVID-19 pandemic, the whole truck market slowed considerably. The demand for trucks (and the microchips that go inside them) plummeted and truck manufacturers had to either mothball their factories or reduce production capacity.
Factories in the microchip sector were similarly hit, but demand from other industries - such as electronic entertainment and the need to support home working - led to overall demand rocketing.
Demand far outstripped supply and the manufacturers responded by changing their output to prioritise the more profitable consumer market.
On top of that, a horrendous storm in Texas (where many of the US-made chips are manufactured) and a fire at a leading factory in Japan seriously impacted on worldwide chip production and supply.
When truck and car production started to pick up again, the situation worsened. Factories took a while to gear up their production but, because of restrictive working practices introduced to combat COVID-19, they’ve not been able to catch up against the shortfall and keep pace with the additional demand.
They continued to prioritise the consumer market, thereby causing a severe disruption to the just-in time manufacturing and supply processes used in truck manufacturing.
Demand from the transport sector was largely pushed to the back of the queue, because the industry is more demanding than most in its requirements. For example, trucks and cars need chips that can cope with both wide fluctuations in the weather and vibrations created by vehicles while on the road.
The situation is creating inflationary pressures – not just in the microchip market but across a whole range of commodities – for example; steel, wood and textiles. As a result, the stark reality is that businesses are going to have to pay more to secure their supply chains and protect their futures.
We at Dawsongroup truck and trailer are weathering the supply storm well, but there’s no doubt that it’s impacting on our:
- Fleet replacement programme (with longer than usual lead times).
- Ability to fulfil new deals.
- Ongoing maintenance and repair schedules.
- Customer charges.
The delay on the supply of new builds means that we’re having to keep vehicles on our fleet longer, squeeze our resources further and monitor downtime more closely than ever before in order to maximise fleet utilisation.
However, we have the advantage of a well-established and comprehensive supplier base and we use our technical expertise to ensure that we get the very best service and prices from our network of over 800 approved service partners (both main and independent dealers) in more than 1,100 locations across the UK.
The well-trained and experienced staff in our in-house Engineering support team have a thorough understanding of any technical requirements and have close relationships with manufacturers and their support teams.
A major player in our sector, we spend millions of pounds each year on parts and labour, providing us with options and flexibility, as well as the profile to ensure we’re not overlooked in the queue for the spare parts we need.
The shortage of microchips and the extended lead times on new builds are likely to be with us for some time yet, so, if you own your fleet and are experiencing problems getting spare parts or test slots, why not give us a call to discuss how moving to ‘usership’ rather than sticking with ownership can help you run your fleet more effectively?
Our team will be happy to discuss how we can make our award-winning rental, leasing or contract hire services, partnership approach and excellent customer service work for you.
Now more than ever is a good time to move all the challenges and risk of maintaining your fleet to your vehicle provider, leaving you to concentrate on running and growing your business and satisfying your customers’ needs.
For smarter fleet management, call us on 0800 032 9766 or contact your local branch.
You have nothing to lose except the endless hassle of fleet management.
Peter Snowden, Engineering Director