The automotive industry is currently experiencing an unprecedented global supply chain crisis. The international shortage of microchips, combined with issues in the supply chain, have created a significant bottleneck that’s delaying the production and shipment of vehicles on a global scale. It has disrupted the entire supply chain, and caused the automotive industry to descend into a state of crisis.
In our technology-driven world, we’ve grown extraordinarily dependent on the microchips that fuel nearly everything in our daily lives – from the smartphones that are fundamental to our modern society, to the core components that power the vehicles we drive. As the world went into lockdown, microchip manufacturers that had to fully or partially shut down were now struggling to meet the backlog of orders.
The automotive industry has been especially hard-hit by this backlog, with factories slowing manufacturing as their floors sit full of vehicles that can’t be shipped simply because they are waiting for an automotive-grade microchip in order to complete the vehicle. As a result, major car manufacturers such as Ford, GM, Toyota, and Honda have significantly cut car production, and shifted their focus to manufacturing only their most in-demand models – delaying the wait times by years for automotive-based businesses such as INKAS, that require specialty vehicle models.
The automotive sector might not recover for years – or even decades – so it’s essential for automotive-based businesses to pivot. As with any business, when facing challenges or disruptions, it’s critical to reimagine your existing operations in order to remain competitive. I have persevered through countless industry challenges for over 20 years by implementing the following key pivoting techniques that can make your business stronger, help mitigate risk, and adapt to situations beyond your control:
- Broaden your offering: When it becomes difficult to procure specific products or supplies, it’s important to diversify. Expanding your lineup to add more readily available products or adding modified versions of your offering to your inventory, enables continued revenue without having to rely on any one specific product.
- Invest in your staff: Your team is an indispensable source of intellectual capital, and by developing their skills with training and leveraging their knowledge, a company can drive innovation and develop the competitive edge they need to survive and grow.
- Focus on proven revenue drivers: Reallocate all your resources to processes and channels that have measurable results, and pause the ones that don’t. This gives you more control in uncertain times by enabling you to better predict how scaling up or down in certain areas may drive your future revenue.
- Prioritize profit generation: In challenging times, your focus is best spent on your highest revenue-generating products and services, in order to give you the working capital to sustain business operations and invest in new developments. So, it’s crucial to drop loss leaders and pause poor performers.
- Develop flexibility: Know your numbers so that you can develop and execute a data-driven plan – but anticipate that the outcome may not necessarily be the results you hoped for. So, revisit the plan monthly, evaluate the new data, and adjust accordingly based on current performance and conditions.
Despite the challenges these last few years have created, we must be resilient and continue to look for new opportunities to address the problems of today. The world is constantly evolving, for better or worse, but we must work together and seize new opportunities in order to secure our futures. In these unprecedented times, it is crucial that both business owners and policymakers collaborate to facilitate a continued economy. It’s time that we rethink policies, develop new technologies, and continue to innovate in order to adapt to the new normal. We must not look at challenges and be defeated by them, but instead allow them to spark the change and innovation that will ultimately improve our society on both a local and global scale.
INKAS® Group of Companies
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