Global Supply Chain Issue: How Chip Shortages are Affecting Technology Companies and What They Are Doing About It

The global chip shortage has made headlines the past several months for driving up car prices and making popular electronics scarce, but it is not only affecting large corporations. Tech companies of all sizes – and across all industries – are feeling the pressure and with no immediate end in sight, they have to plan how they will continue supplying products to their consumers. One industry where this is of particular importance is the healthcare industry which needs these chips to provide essential products to customers.

We spoke with Jenna Costa, VP of Operations for Soberlink, a leading alcohol monitoring device, to learn how they are approaching the chip shortage.

How has your company been impacted by the chip shortage?

Soberlink’s 2021 was drastically impacted by the chip shortage. Like so many other companies, our shipment was delayed indefinitely, so we had to be quick to manage our inventory and keep products available to our customers. We spent countless hours tracking the issue and mitigating as much damage to sales as possible. We monitored our shipment to component ratio on a weekly basis to properly allocate devices to our markets and to guarantee our customers continued to have access to our alcohol monitoring system. We are lucky enough to have two different remote breathalyzer devices that use two different microprocessors – The Soberlink Connect device and the Soberlink Cellular device. This diversity allowed us to continue manufacturing the Soberlink Cellular device in bulk while slowly releasing the Soberlink Connect device on a month-by-month basis.

What have you been doing to combat it?

During the past nine months, we have reached out to every contact we have to try and beg or borrow these components. We had our vendors reaching out to their European contacts to make trade agreements to secure us some components, but nothing worked for months and months. We eventually ended up at the drawing board where we mapped out what it would look like to redesign our device to include a different, somewhat more readily available microprocessor chip. We are currently developing a new version of our Soberlink Connect device that will utilize a new microprocessor chip. Although these chips will still face the same shortages that the world is facing, at least now we have two versions to try and get our hands on rather than just one.

Are there any alternative solutions if you run into a supply issue?

As you see across many different industries, the best solution to keep sales afloat is to sell refurbished products. Whether it’s a used car to get from here to there or a recycled Soberlink Device for alcohol testing, customers in need will be happy to buy what they can get their hands on. We use an FDA cleared manufacturing facility to build our product and refurbish our returned devices so that we can trust their reliability and accuracy. This is especially important for our markets which include Addiction Recovery and Child Custody. Our refurbished devices are as good as new, and in this climate, any finished product is as good as gold.

What advice would you give to other companies who are worried about chip shortages?

Agility, diversity, and relationships.

We were able to act quickly and manage our demand, gearing sales toward one product rather than another, and we were in a position to ramp up production of our refurbished devices instantly. This allowed us to continue to have multiple product offerings on our webstore all year long.

We leaned on our Engineering and Development team to come up with a plan to diversify our options for microprocessor chips so that we can pivot our manufacturing based on what component we have in stock.

Ultimately what saved the day was leveraging a relationship with a supplier who was able to secure 2,500 microprocessors for us. We were told there was a 0% chance we would get allocated parts in 2021 through the first half of 2022, but somehow our contact made it happen.

This article does not necessarily reflect the opinions of the editors or the management of EconoTimes