As a highly capital-intensive industry with average fab costs easily exceeding $10 billion, the semiconductor supply chain allows no room for error.
By its very nature, the semiconductor industry is cyclical. But it would be a mistake to dismiss the recent turbulence as business as usual.
Just a few years ago, consumer demand for key products looked set to fall dramatically. Accordingly, chip manufacturers cut factory output. But the expected drop in demand never happened. Semiconductor producers found themselves having to work frantically to fill the sudden backlog of global orders. This process took months and caused serious upheaval in the industry. But just as chip supply finally got back on track, new challenges to production and logistics emerged.
It seems that the semiconductor industry must now accept that uncertainty is the new normal. Disruptions and imbalances in the supply chain are going to become increasingly difficult to predict. It will be much harder for manufacturers to plan effective strategies to cope with instability.
Major changes in the industry continue to complicate supply and demand. The only certainty is that the semiconductor industry is sure to become increasingly volatile.
There are no easy solutions for the semiconductor supply chain. But the right 3PL partner can make all the difference.
Did you know?
53% of manufacturers anticipate increasing the geographical diversity of their supply chains over the next 12 months.
The digital transformation of the semicon supply chain
According to a McKinsey study on back-end automation published in August 2023, there are some major benefits to digital transformation in the supply chain. The paper cites significant gains over a 12- to 18-month period for IDMs and OSATs, highlighting the need for supply chain coordination.
As a result of effective digitisation, companies have seen up to 30% increases in shop floor throughputs, a 20% decline in unit product costs, and 30% fewer customer complaints.
Implementing these changes requires an intrinsic understanding of the semiconductor supply chain’s tools and processes.
Your semiconductor logistics partner checklist
Consider the following when choosing your next 3PL or when evaluating your existing provider:
- Do they have the right carriers and subcontractors for moving your specific goods?
- Do they have robust digital tools underpinning their operations?
- Do they follow strict product handling processes, particularly at shipment handover points?
- What are their documentation processes like?
- Do they provide instructions in the native language or provide digital photo evidence?
- Can they offer a global network that adheres to the same high standards?
- Can they provide logistical solutions specifically designed to deliver semiconductor shipments safely from end to end?
- Can they provide supply chain risk assessments supported by digital tools that allow all actors to collaborate and prevent disruption?
Learn more about Lane Risk Management now.
One consistent service, all over the globe
While a high-quality 3PL provider should be capable of providing all these services, only a truly resilient partner can maintain consistent standards around the world. For safe product handling or the right documentation in native languages, you need a global team of experts who can transport your products on time.
The semiconductor supply chain is evolving. The focus is now on increasing collaboration to navigate disruption more effectively. Kuehne+Nagel can keep your shipment moving safely despite setbacks.
Explore semiconductor industry resource center
Unlock a wealth of resources to enhance your semiconductor business strategies. From expert articles to in-depth guides, our resource center has everything you need to stay ahead.
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