From consumers to producers to retailers and investors, everyone who has any association with the supply chain has been frustrated by its recent performance. But perhaps no one is more exasperated by its present inconsistency than procurement professionals. Procurement pros are tasked with obtaining the equipment, parts and products required to complete their own processes. When those components aren't available, they have to improvise to avoid slowdowns.

Procurement problems have been particularly entrenched when it comes to semiconductors. Serving as the nerve centers for a wide variety of  technologies and machines, semiconductors are in severe short supply. The fact that they're so broadly used has only exacerbated their unavailability. As the SemiConductor Industry Association has reported, approximately 1 trillion semiconductors were sold worldwide in 2021 alone — a record high for a 12-month period. While chip manufacturing capacity has improved somewhat in recent months, breakneck demand will frustrate semiconductor supply for the foreseeable future.

In light of this, here are a few tips procurement teams should be mindful of as they seek to acquire chips in a tight market:

1. Be discerning with chip vendors
Scammers are always looking to take advantage of unsuspecting victims, and that's what is happening in the current supply-challenged climate. Renato Souza, vice president of business development for a chip distributor based in Texas, told Supply Chain Dive that fraudsters are brazenly passing off phony semiconductors as legitimate. With chips being so hard to come by, it's not uncommon for customers to buy what fraudulent vendors are selling — which is often a bill of goods. 

"There's a lot of people taking risks out there just buying from people and hoping that the parts coming into their sites and the manufacturing lines don't fail," Souza explained.

Encountering counterfeit semiconductors is not a new phenomenon; the Semiconductor Industry Association has warned about it for a number of years. But the high rate of demand — both in the United States and abroad — is increasing its prevalence. The smartest way to avoid being hoodwinked is to only buy semiconductors from reputable vendors. Do your own research or visit the Semiconductor Industry Association's website, which has a database on vendors that are licensed to sell chips. 

Semiconductors may be the hottest item on the market.Semiconductors may be the hottest item on the market.

2. Pledge to meet a certain buying quota
While many factors created the chip crunch, one of them had to do with not enough entities buying them — or enough of them, to be more precise. As Vanessa Miller of the litigation firm Foley and Lardner told Supply Chain Dive, those customers who needed chips a few years ago didn't purchase enough of them to make increased output worthwhile."We've heard from chip suppliers, 'We were happy to make chips for you. You just weren't ordering them,'" Miller said.

3. Avoid 'ghost bookings'
Ghost booking is a supply chain strategy in which customers buy up shipping space on multiple vessels, but for the same items sold by several manufacturers. This essentially serves as a backup plan in the off chance one supplier runs into trouble with production. But Souza warns that the unintended consequence of this strategy is artificially inflating prices. Instead, it's far better to shop with only a couple of suppliers as opposed to a half dozen or more. This should help keep prices more stabilized.

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