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Chip Shortage Puts the Brakes on Automakers

Deliveries of full-size pickups and SUVs are delayed because of a global chip shortage caused by temporary plant closures amid the pandemic.

This shortage, coupled with port closures that prevented shipments of auto parts from unloading, has further limited truck and SUV production at General Motors and Ford.

Video Spotlight: 

This post is based on the CNN article, Computer chip shortage starting to hit automakers where it hurts, by Chris Isidore, March 22, 2021, and the YouTube video in the Spotlight. Image source: Pavel Kirichenko/Shutterstock

Discussion Questions:

1. How did the chip shortage and auto parts delay affect MRP at General Motors and Ford?

Guidance: Chips and auto parts are essential dependent-demand components in vehicle production at General Motors and Ford.  Supply disruptions of dependent-demand components affect the accuracy of master production schedules, bills of materials, and inventory data because the assumption of constant lead times no longer holds.

2.  How did General Motors and Ford respond to the chip shortage and auto parts delay?

Guidance: General Motors and Ford used their chips on hand to keep building high-demand and high-profit margin vehicles. Both companies also reduced capacity by temporarily lowering the number of shifts and shutting down production plants.

General Motors built some versions of its truck without the needed chips, while Ford left its bestselling F-150 pickup truck unfinished while waiting for semiconductors.

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