The ITS manufacturer AGD Systems is warning that the global chip shortage and other supply chain issues are forcing it to refocus its manufacturing strategy and stock control.
The company says that a surge in demand post Covid and different recovery rates in different countries means the supply chain is struggling to deliver the components needed in a timely way.
AGD’s Commercial Director Ian Hind told Highways News, “It’s like a supermarket on a sunny bank holiday – you pop in for barbecue food and it’s all sold out. We’re seeing the same thing in the electronics industry.
“Manufacturers are rationalising what they make, because they’re finding that the demand is far, far exceeding what they can actually produce. Whilst they’re looking to increase the rate of production, it takes quite a few months, even years to add new fabrication facilities, so they are either putting the product on allocation, or making the lead time really, really long. So rather than us being able to get product in maybe normal six to eight weeks, it might suddenly extend to 30 to 40 weeks.”
Mr Hind says the company has doubled the amount it invests in the stock it holds, so it can be certain it can respond to demand and have the components it needs to ensure it does not let its customers down.
“We are very well connected to the manufacturers who are making the silicone, printed circuit boards and everything else, and their message to us is quite plain – look as far out as you can, and see if you can commit or forecast as far ahead as twelve months.”
But, he added, this means his company is having to invest without the certainty it will actually have orders for the products when the components arrive.
Mr Hind believes he is speaking for the industry when he asks Local and City Authorities to look at their forthcoming budgets and make allocations and commitments now, even for financial year 2022/23. “If they can just give us a hint of what they’re looking for, we’ll cascade that all the way through down through the pipeline to make sure we meet demand,” he added.
(Picture – AGD)