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Supply Industry Supply Chains Stretched to Breaking Point - Value-Added Networks as a Guarantee of Success for German Industry in Jeopardy!

Editor: Nicole Kareta

The supplier industry is under severe pressure. The semiconductor shortage leads to significant production losses in the automotive industry and other important customer sectors. The short-notice announcements of plant closures are putting enormous pressure on supplier companies in Germany. Meanwhile, suppliers themselves are experiencing problems with the supply of raw materials.

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The supplier industry faces significant problems following the semiconductor shortage.
The supplier industry faces significant problems following the semiconductor shortage.
(Source: gemeinfrei / Pexels )

After the Corona shock and the sudden slump in orders in the first quarter of 2020, the assembly lines are once again at a standstill after a brief recovery. The reason for this is the supply interruptions for semiconductors, which are built into almost every product. For the many supplier companies in Germany, the situation is coming to a head. Binding orders for deliveries are canceled at short notice, sometimes just one day prior, and trucks have to turn back. Suppliers' delivery warehouses are overflowing, resulting in enormous additional costs for logistics and storage. At the same time, customers, such as car manufacturers, are refusing to take the delivery of the ordered goods and are rejecting justified payment claims from their suppliers, citing the chip shortage. Consequently, Suppliers are deprived of the necessary liquidity and the basis for planning.

Stable and mutually appreciative relations between the automotive industry and suppliers are particularly important at present. Suppliers, for their part, are under unprecedented pressure. This is due to the considerable distortions in global supply chains, in which comparatively small disruptions repeatedly have enormous and long-lasting effects: They themselves have to buy in difficult markets. Many raw material prices, such as for steel, metals, and plastics, are at historic highs. In some cases, the required quantities are simply not available. At the same time, energy prices are rising sharply. This puts additional pressure on suppliers' liquidity. For many medium-sized companies, this could mean the end.

Christian Vietmeyer, spokesman for ArGeZ, comments: "An important asset is dwindling, namely the trust in the reliability of customers and their call-off notices. It cannot go on like this. Anyone who still wants strong value chains tomorrow cannot unilaterally pass on risks and ignore contracts now. We need transparent communication, more honesty, and fair dealings with each other in the supply chains. In any case, the technology shift in mobility will only be manageable with the suppliers."

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