Chip shortages at General Motors a short term issue but show risks of global 'just in time' supply chains
General Motors is the latest car manufacturer to temporarily suspend production due to a shortage of semi-conductor chips. Christian Stadler, Professor of Strategic Management at Warwick Business School and an expert on the automotive industry said:
"The shortage of parts - and more specifically semi-conductor chips - has forced a number of car manufacturers to temporarily suspend production in recent weeks.
"Volkswagen, NIssan, Honda, and Toyota have all experienced similar problems. However, this is likely to be a short-term issue and there are no signs it will become a long-term problem.
"These shortages show the vulnerability of global supply chains to external shocks like Covid-19. At the start of the pandemic, when China was shutting down, many factories experienced a shortage of parts.
"The only reason it didn't become a bigger issue at the time was that the virus spread so rapidly that those car factories had to close anyway. If it had been contained to China, those shortages would have become a much bigger issue for the car industry because their supply chains are so reliant on parts from China.
"While global integration and the 'just in time' manufacturing process help to keep costs down, this pandemic is a reminder that this approach is not risk free."
Sales by email