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Re: Roots of Hans's supply chain issues

 

Hi Mike

It is not just profit-driven. We have seen decades of a relentless drive to make everything cheaper. Profit = Revenue - costs. The consumer pushes revenue down and the manufacturer has to push costs down or get squeezed out. The delicate situation arises. I think it may be a bit harsh to say that consumers (ordinary folk like you and me) demand lower and lower prices. But the global system is set up in such a way that this result naturally arises.?

One can theorize about the global semiconductor shortage. Factory closures, workforce shortages, logistics problems, Covid19-driven lapse in demand then back with a vengeance 6 months later, work-from-home demand for tech goods etc etc. But in the end we can see similar issues in other areas too. Look at the recurring toilet roll crises (among other common household items). Empty supermarket shelves. Though there was never any shortage of toilet rolls (no supply issues), nor was there a sudden extra demand caused by any particular need for the cleaning of the human posterior to be required much more frequently. Just panic, human emotion. Scaled up, that's also a factor in the chip shortage.?

I myself am guilty of it too. When I heard of the shortages I immediately bought 4,000 Si5351A from Digikey and Arrow which cleaned out their entire stock. Normally I'd only buy them by the reel (2,500), one reel at a time, when I needed them. Not 4,000 in one go even when I still had a partial reel left. At the same time I bought 2,500 ATMega328, these were also unobtainable for a few months. It was a temporary investment for me as long as I believe I will use the chips up... and it did mean I could continue QCX-mini and QCX+ production without interruption, throughout the last 2 years. From my point of view as a manufacturer, it made sense for business continuity. But if every manufacturer got scared and did the same thing, which they did, you see what happens.?

I don't think there's any great conspiracy or powerful forces directing it - but this is just the way the world system has been evolving. Thousands of individual decisions that make sense on a micro level, add up to make big consequences.?

73 Hans G0UPL

On Mon, Nov 8, 2021 at 5:31 PM Mike Perry, WA4MP <editor@...> wrote:
The captain of a large cargo vessel has a great video explaining the various roots of the issues Hans has with getting the parts he needs. This comment about the high-tech industry is particularly relevant.

> 4:26 "... delicately balanced supply chain ..."? What you should have said is "a perilously stretched supply chain that had no contingency plans." I have worked in the high-tech supply chain discipline for almost 15 years, and top management has refused to listen to warnings or do any risk planning for longer than I've been in it. Everything has been leaned out to the max, to maximize profits and bonuses. Now the economy and consumers are paying the price, while the execs who put us here are sitting on piles of cash.
>

When a system of trade is already being pushed to its limits by a desire to maximize profits with a just-in-time inventory, it has no reserves to call on when a crisis develops. We¡¯ve had several major ones in the last couple of years. The troubles then feed on one another. Those 70+ ships sitting at anchor off LA and San Diego aren¡¯t available to ship other cargos between other ports in other countries.

Interestingly, I¡¯ve not noticed any increased delays in the orders I¡¯ve made from China to ready for the arrival of that QCX mini. The last of them, an iambic key, should arrive today. They take several weeks to arrive just like before but not more weeks. Of course, what I was ordering was small and seems to have gone space available on cargo aircraft. The package may sit a week or so waiting for a flight out, but it¡¯s not on a ship waiting at anchor for weeks like larger cargos.

¡ªMike Perry, WA4MP
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