- In spring 2021, the shortage of semiconductors forced carmakers around the world, including in Spain, to stop production lines.
- One small component halted an entire industry: many companies were unaware of their dependence on a particular supplier or material.
- Mapping critical suppliers, and the suppliers of suppliers, stopped being a theoretical exercise.
In spring 2021, the shortage of semiconductors forced carmakers around the world, including in Spain, to stop production lines. The vehicles were ready in almost every respect except for one small part, and without it they could not leave the factory. The image of plants stopped for want of a component that hardly anyone outside the sector knew about surprised business owners and consumers alike. It was a reminder of how little of a chain is visible when everything works.
Beyond the car industry, the episode left a lesson of general reach. A supply chain is only as strong as its weakest link, and sometimes that link lies several levels below what the company sees every day. When it breaks, the impact is not limited to the affected supplier: it spreads upwards, to the final product, and towards customers, who wait for a delivery that does not arrive. It is the kind of risk that appears in no budget until it materialises.
A small part, a whole industry
Semiconductors, or chips, are present in almost any modern electronic product, and a car contains many. They are involved in functions as varied as engine management, safety systems and the dashboard display. That is why, when they ran short, carmakers around the world, including in Spain, had to stop production lines during spring 2021.
A car is an assembled product in which every part has its place: without just one of them, the vehicle cannot be completed. That is the case in complex-assembly industries, where thousands of components from hundreds of suppliers must arrive on time and in the exact quantity. One small part was missing and an entire industry came to a halt. Until supply returned to normal, production and delivery times hung on a single variable.
Hidden dependencies
The chip crisis showed that a small component can stop an entire chain. Many companies did not know to what extent they depended on a particular material or supplier, because that dependence lay several links further back. The problem is not visible until supply is interrupted, and by then it is too late to look for alternatives calmly.
For any company that makes or assembles products with electronic components, even outside the car sector, the question is the same: what do my suppliers depend on. For end customers, the episode was a reminder that the availability of certain goods is not guaranteed. Knowing the suppliers of one’s suppliers is, at times, the key to anticipating a problem. Asking each key supplier about its own sources is not distrust, but professional practice.
Mapping the chain
Mapping critical suppliers, and the suppliers of suppliers, stopped being a theoretical exercise. It is useful to identify which components have no substitute, what lead times they run on and what inventory margin is worth keeping. No sophisticated system is needed: a well-maintained spreadsheet, reviewed regularly, can be a good start. What matters is that the information exists before it is needed and that someone is responsible for keeping it current.
And it is reasonable to talk to customers in advance about possible delays, rather than doing so once they have occurred. Honest, early communication protects the commercial relationship far better than a late explanation. It is also worth reviewing the contract clauses that regulate delays, penalties and force majeure, to know what can be demanded and what has been promised. A clear contract avoids arguments when the problem arrives.
Visibility over the chain is a competitive advantage.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
