Amazon WorkSpaces – a solution for organizations affected by the microchip shortage and supply chain issues.
The US is experiencing the effects of a struggling supply chain. Experts are warning consumers to buy Christmas presents early. Reports out of the port of Los Angeles show cargo ships idling offshore, waiting for space to unload. The microchip shortage is slowing the production of computers and other hardware. This is the culmination of 18 months of market unpredictability and fluctuating supply and demand. The state of the global supply chain not only affects what will be under the tree on Christmas Day – it affects the corporate world too. How will corporations keep employees connected if they cannot access new computers? Deciphering how we got here is hard, that’s why we did it for you. Here’s a full explanation of why it’s taking so long for your new work computer to come in and how Amazon WorkSpaces can solve your problems in the meantime.
Root Causes
The consensus is that COVID is the key factor that pushed the global supply chain into its current state. For the most part, this is true. Lockdowns to mitigate COVID spread disrupted every part of the supply chain, from raw materials to manufacturing and shipping. But there were issues with the supply chain before the onset of the pandemic.
In 2018, President Trump imposed tariffs and sanctions on China, resulting in a trade war. Tariffs were placed on steel, aluminum, Chinese products, solar panels, and washing machines. The sanctions on Chinese technology companies barred them from purchasing key components like microchips from US producers. Companies began to stockpile microchips and other products. Chinese technology companies looked to other countries to source parts. These actions significantly increased and shifted demand.
Additionally, the key supply strategy for most companies is the “on-demand” strategy. Under this method, businesses keep the supply that they need on hand, limiting buying excess to cut the cost of warehouse storage. In predictable circumstances, this strategy is effective. But the disruption of manufacturing capacity and the widespread use of the on-demand strategy put stress on the entire supply chain. These two factors set the stage for COVID to create a ripple effect on the functionality of the supply chain.
The Ripple Effect
Once COVID hit and countries enacted lockdowns, demand tanked. Manufacturers cut production capacity, laid off or furloughed workers, and sent them home. Shipping companies reduced or canceled trips. Shipping companies used containers to move COVID supplies and PPE all over the world on irregular routes.
American demand for goods rose as lockdowns continued and more Americans began working remotely. Consumer spending rose when the US government sent out stimulus checks in May 2020. As demand rose, supply couldn’t keep up. Differing COVID strategies and labor shortages across the supply chain kept production and shipping capacity low.
Restarting the supply chain wasn’t simple. A shortage of shipping containers emerged in late 2020, increasing shipping costs. Prices began to rise, especially on the route with the highest demand, from Asia to North America and Europe. Last year it cost $1,500 to send a 40-foot shipping container from Asia to Europe. Today it costs $17,000. Issues with container circulation are largely to blame for the shortage. Containers that sent COVID supplies would have been shipped back empty, so companies never retrieved them. With such high prices along the route traveling from Asia to North America and Europe, shipping companies don’t have financial incentive to get containers that are stuck in ports along less profitable routes.
Shipping companies are also concentrating the use of their containers on sea routes, disrupting the industry further inland. Containers that are normally taken off a cargo ship and sent on a train inland are being sent back to Asia right away. Coastal ports are clogged because cargo isn’t leaving fast enough. For example, import volumes for the port of LA increased by 27% in June 2021 compared to last year. The container and labor shortages in the trucking and train industries have created capacity-constrained facilities and bottlenecks.
The issues at every link of the global supply chain have been manifesting for months, and consumers are starting to really feel the effects. Clogged ports, competition for limited shipping space on pricier routes, and a lack of manufacturing capacity and supply of parts have raised prices and extended lead times for items across the board.
An Alternative Solution
Companies are struggling to outfit their employees with the resources they need to work due to the microchip shortage. Laptops are $50 more expensive on average and wait times have extended from six weeks to three months. Leaders from Dell and HP have warned that lead times won’t go down until they have better, reliable access to microchips, which could be in mid-2022. In the meantime, many customers are searching for a solution that will allow their employees to get to work now, without sacrificing security, performance, or compliance standards. Amazon WorkSpaces is a fast-acting solution that could be a great fit while organizations wait for new computers.
Amazon WorkSpaces is a fully managed desktop virtualization service that can be accessed from any supported device. Organizations can follow a Bring Your Own Device (BYOD) model, allowing employees to work from their own laptops while they wait for computers to ship. Amazon WorkSpaces is flexible and scalable. A customer in Florida spun up 160 WorkSpaces within 48 hours, and MRS BPO went from 0 to 1,000 desktops within three weeks in March 2020. The solution follows a pay-as-you-go pricing model so you only pay for the exact number of resources you need on an hourly or monthly basis.
In terms of security, Amazon WorkSpaces simplifies VDI for your IT team. Data is never stored on end-user devices, only on the AWS cloud. End-to-end PC over IP encryption is used to protect data in transit so your team only has to focus on the security of your environment. Additionally, Amazon WorkSpaces fills compliance standards for HIPAA, PCI, and more.
Amazon WorkSpaces was designed to be flexible and bend to customers’ needs. Whether an organization is looking for a solution to its hardware struggles for now or for forever, Amazon WorkSpaces can be a great fit.