Mitigation of supply chain uncertainties caused by material shortage : A case study with Loccioni

University essay from Uppsala universitet/Institutionen för samhällsbyggnad och industriell teknik

Abstract: The ongoing semiconductor shortage impacts organizations throughout the supply chain operationally and financially. Limited material for a sudden increase in demand during the Covid-19 pandemic led to a heightened supplier power and result in the prioritization of customers. Companies like the test-bench producer for the automobile industry Loccioni face thereby the challenges of being a relatively small and thereby almost invisible company in the automotive supply chain. The purpose of this master thesis is to research what pre- and post-disruptive strategies mitigate the negative impact of supply disruptions for organizations with small- and medium-sized enterprises (SME) character in the context of the semiconductor shortage. Additionally, it aims to understand the supplier-buyer power shift during such events and how supply chain trends like lean management contribute to the vulnerability of organizations to such risks. To answer the research question, a qualitative case study was conducted with the high-tech manufacturer Loccioni. Data was collected through a period of ethnography and un-/semi-structured interviews and assessed through thematic analysis. The developed conceptual framework provides a wholesome guidelinefor SMEs or SME alike companies on how to incorporate reactive risk management by considering the whole disruption cycle (pre- and postdisruptive) to mitigate impacts caused by the semiconductor shortage or similar crisis. The findings of this case study show that it is important to lower dependencies on single suppliers and strive for a flexible working culture to encourage turning challenges into opportunities and being decisive during disruptive events. Following a lean approach with a just-in-time strategy is considered a high risk when not having an evolved supply risk monitoring and analyzing system implemented. Therefore, proactive risk-mitigating approaches, such as safety buffers, building few but close relationships and engaging in cooperative activities, are encouraged. Also, even though the resources of SMEs are limited, is alertness towards supply chain risks considered crucial requiring activities like supplier audits and a well supporting IT infrastructure. During disruption, crucial quick and flexible reactions are enabled by agile project management and entrepreneurial efforts fostered by the company culture. Keeping a balance between being too flexible and structured is mandatory to act efficiently. It is important to create a database and safety stock of the critical material and adjust procurement strategies by multi-sourcing and increased escalation efforts. Internally and externally combined efforts can be key to optimizing operations, sourcing the shortage materials and finding alternative technologies to substitute. Strategic collaborations with supply chain partners, exploitationof customer relationships and continuous communication are crucial for smaller enterprises to maintain customer satisfaction. However, there is no single solution for every organization, but rather suggestions which need to be adjusted and evaluated against a company’s business strategy and competitive advantage. 

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