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Some things I gathered from that:

1) Automakers told their suppliers that they were shutting down so they could save money and now are sad that chip makers are serving customers that kept paying the whole time.

2) Automakers are refusing to update technology and get off the old wafer. Chip makers are saying the tech needed to make the old chips is expensive to invest into with limited profit return since it's all legacy.

Sounds to me like automakers brought a lot of their troubles on themselves.
 
It's not just semi's. Many supply lines were disrupted by covid, economic shutdowns and reliance on Just In Time (JIT).

shortage everyhthing.jpg
 
Good thing I have plenty of rabbits, deer, and tree rats around my place if food gets scarce. Granny’s possum stew will do in a pinch.LOL!
 
this issue is impacting a broad base of commodities. market commodity suppliers play this game every year. it's nothing new, we just have short memory spans. dram shortage in 2016 and 2017? nand wafer shortage of 2017 and 2018? covid impacting supply base last year obviously, and now IC shortages. market commodities are that for a reason. suppliers drive market price. only a handful of mfg's in supply chain.
 
Epsilon Plus said:
Some things I gathered from that:

1) Automakers told their suppliers that they were shutting down so they could save money and now are sad that chip makers are serving customers that kept paying the whole time.

2) Automakers are refusing to update technology and get off the old wafer. Chip makers are saying the tech needed to make the old chips is expensive to invest into with limited profit return since it's all legacy.

Sounds to me like automakers brought a lot of their troubles on themselves.
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"Then late last year, demand began to pick up. People wanted to get out and they didn’t want to use public transportation. Automakers reopened factories and went hat in hand to chipmakers like TSMC and Samsung. Their response? Back of the line. They couldn’t make chips fast enough for their still-loyal customers."
 
It’s the time that we yearn for the simpler times of yesteryear, and all things mechanical. Translation: back when all things could be repaired, not just tossed in the garbage. Back when, if you had an electrical issue, you could take the unit apart and file the contact points, or oil the timer and get back up and running. Back when chewing gum wrapper and piece of old bailing wire would get you home. And to think we pay upwards of 90k for the “privilege” to “own” these items that we can’t even begin to try to fix under a shade tree on a warm summer afternoon......oh well, I guess that’s why I keep my hobby cars around.
 
Bozo said:
It’s the time that we yearn for the simpler times of yesteryear, and all things mechanical. Translation: back when all things could be repaired, not just tossed in the garbage. Back when, if you had an electrical issue, you could take the unit apart and file the contact points, or oil the timer and get back up and running. Back when chewing gum wrapper and piece of old bailing wire would get you home. And to think we pay upwards of 90k for the “privilege” to “own” these items that we can’t even begin to try to fix under a shade tree on a warm summer afternoon......oh well, I guess that’s why I keep my hobby cars around.
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Changing points alongside the road, and setting them with a matchbook cover is a lost art.
 
elephantrider said:
this issue is impacting a broad base of commodities. market commodity suppliers play this game every year. it's nothing new, we just have short memory spans. dram shortage in 2016 and 2017? nand wafer shortage of 2017 and 2018? covid impacting supply base last year obviously, and now IC shortages. market commodities are that for a reason. suppliers drive market price. only a handful of mfg's in supply chain.
Click to expand...

Most Americans can only handle one crisis at a time. Most Americans have never not been able to buy something they wanted, and now it is fun to watch. Many spoiled Americans are twitching when being told something is not available for any price.

It is fun to watch the RV boards as folks are retiring, have the $1.5 million to buy a new class A diesel pusher, being told the options selected are not available. If they want the unit, they will have to accept it with what the manufacturer can source to put in it, and the price is not discounted! The upper end RV manufacturers have more orders than they can fill at the moment. The folks with money are so upset!!

JIT supply systems are not good when supplies are critical. But has worked for years and saved companies billions. I have argued against JIY for years. Remember the medicine shortage 7 months ago? It is still going on. But the news is not reporting that.

Tried to order a refrigerator lately?
 
RV_Goose said:
Most Americans can only handle one crisis at a time. Most Americans have never not been able to buy something they wanted, and now it is fun to watch. Many spoiled Americans are twitching when being told something is not available for any price.

It is fun to watch the RV boards as folks are retiring, have the $1.5 million to buy a new class A diesel pusher, being told the options selected are not available. If they want the unit, they will have to accept it with what the manufacturer can source to put in it, and the price is not discounted! The upper end RV manufacturers have more orders than they can fill at the moment. The folks with money are so upset!!

JIT supply systems are not good when supplies are critical. But has worked for years and saved companies billions. I have argued against JIY for years. Remember the medicine shortage 7 months ago? It is still going on. But the news is not reporting that.

Tried to order a refrigerator lately?
Click to expand...
Yep, JIT only works as long as the whole system works. With today’s globalization, it makes it worse. If companies were not taxed for carrying inventory, maybe that would help, like the old days.
 
vwry very few organizations would spend the capital investment to insulate from supply continuity issues, to much extent. that would mean sitting on a year plus of dsi. especially in the tech / mfg industry.
 
JIT in practice is not zero inventory. The big end customers like automakers all require the suppliers hold 1 to 3 months usage in their inventory in case of shortages. So its just not on FCA's books or taking up FCA's warehouse space. The problem is a lot of suppliers, especially 2nd or 3rd tier, never actually do it. It only takes one supplier to stop an assembly line.
 
ramblinChet said:
That's not my experience - I can remember working for a German company who was a Tier I supplier to the big three with a very critical engine component. We held zero inventory for the entire time I was there. There were several times where our component stopped the engine assembly plant and we would hire a private jet to fly several pallets of components up to restart the plant. The cost to stop an assembly line is astronomical.

Our JIT system was so lean that it was not uncommon to receive parts in shipping and literally walk them right to the respective clean room to be used immediately. We had no warehouse space at our site aside from storage of replacement parts for our automation and robotics.
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I think you misunderstand. YOUR JIT system simply pushes inventory burden onto your suppliers, who may flow it down to their suppliers, etc. I get the contracts all the time with clauses that we are required to hold sometimes up to 6 months so our customer's JIT isn't screwed up. If you as a supplier are running JIT with your supplier someone at the end customer approved. But eventually someone in the supply chain has to stock to account for ramp ups, raw shortages, etc. So in theory we should never run out of parts and go late, but in reality it doesn't get checked on and gets ignored until there is a problem.
 
an organizations JIT process is different from a vendor / supplier VMI process, which actually enables the organization's said JIT process.
 
elephantrider said:
an organizations JIT process is different from a vendor / supplier VMI process, which actually enables the organization's said JIT process.
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I know! That is what I was saying.

Big picture, a manufacturer running JIT/VMI/anything else that advantages them and disadvantages it's suppliers gives up some control and safety factor when someone in the supply chain eventually doesn't do what they were required to do and gets exposed. Otherwise we would have had stockpiles of chips or wafers to fill some of this.

Another factor going on right now is the Asian manufacturers competing for the same supply have really started panic buying in the last few weeks so I expect whatever estimates we hear right now to get worse before they get better. Some of the raws going into electronics manufacturing went from business as usual at March 1 to 6 month backorder at April 1. It's getting interesting.
 
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