Are we entering a period of "goods" shortages?

[opus1]

Ever been to a brand new Lowes?
Bins will have plenty of the right things - a joy.
Accounting/inventory theory calls for non-staff to count.
(I did it some as a kid - bras at K-Mart.)
Anyway, if there are 17 of something, even 17 different things, that bin is DONE!
Marked as complete, no need to order more, they obviously do not sell
Since the staff stands around and talks, it will never get better.
Those will be there until we stop going....

You brought back memories for me - in high school I remember the band kids being 'hired' to do inventory for, I think it was the Venture store at the time. Worked something like 4 hours on a Friday night after the store closed and the band got a donation for our efforts.

More "recently" I worked part-time in the plumbing department of a midwest-based home improvement competitor to Lowes/Home Depot. Slow times on Sunday afternoon were spent going through the "can't remember where you got the fitting? Leave it here and we'll put it back" baskets located every couple of feet in the aisles where all of the fittings/couplers/etc lived. Fun times...

 

[Dave Hess]

As manufacturer of electronic goods OH yeah - the likes of which you probably haven't seen.

There are many reasons for this.

Just in time inventory vs stocking practices is the big one combined with shortages caused by last years excessive reduction in inventory investment.

The whole global distribution "flywheel" stopped cold last year - getting it running again will take time.

Yep, even some medical equipment parts are difficult to get due to the shutdown.

 

[JC1]

I'm guessing people who earn a living with these parts will start to hoard them.

I think I need to get on Rockauto and order those brake parts I've been putting off!!!!

 

[UncleDave]

Yep, even some medical equipment parts are difficult to get due to the shutdown.

I have many medical OEMS, they are struggling to get components including my parts.

What they did was cancel on ongoing PO's last year and refuse shipments they previously would have taken and blamed covid.

They would like for me to have continued to build the parts they THOUGHT they needed but wouldn't commit to, but I got screwed once expecting them to meet their prior commit, now its all on them including the delay and or price increase.

No commitment from the client - no commitment from me (supplier)

 

[Trav]

I haven't been to a big box store in over a year but I have noticed a lack of inventory at motorcycle dealers.

I was at a big MC dealer yesterday dropping off some injectors. I asked the GM how things are going, he said it sucks, we cant get much of anything and some things nothing at all.

 

[PandaBear]

It is also not just the inflation and shutdown, there was a trade war seriously going on prior to this and things were tight on many products. Some transition away from China takes time and at reduced capacity. Plus the inflation risk means a lot of USD was spent buying up resources (iron ore, chips, scrap metals, etc) before things get expensive.

What I have seen now locally, is that desks, computers, mattress, etc all went up in prices (or the low end products discontinued), and the once reasonable priced used baby stuff like cribs, crib mattress, etc are now given away for free during this pandemic. Something tells me people are really rearranging their lives and different things are needed now than before.

 

[Snowflake White]

I believe at least some of this is due to hoarding, and media hysteria which causes panic buying even when things are not at all in short supply, that includes toilet paper, ect...also believe that many companies are using the COVID business environment to take advantage even though they may have no shortages at all they are acting as if they have inventory shortages to raise prices. I think it is a very common thing today...
I say if you don't need it now, wait until next year.

 

[bdcardinal]

I have more parts on backorder than I have ever had in my history of selling parts. I think at last count it was 192 part numbers with most not having an ETA off backorder. When I put orders in to Ford I number them with the date and 1 for special orders, 5 for stock orders. The system wouldn't let me create 04211 today because there was still a part open on that order from last year.

 

[jws926]

Just like at the beginning of the Pandemic, there was two brothers who were buying up all the Perell in their State.
Planning on selling at huge profit.
---------------------------------------
After all the bad press, and death threats, they ended up donating it.

You left the out the part that they made a settlement with the TN State AG offices to avoid being prosecuted, they did it to save their butts.

 

[wpod]

I was called by the property manager yesterday and a refrigerator went out on a rental. The repair guy said the motor went out, it was 15 years old . Nope I am buying a new one . The wife called the big box stores and all were out of refrigerators . Nice wife ! I said call Parma Appliances . They had several on the floor .Bought the one on sale with free delivery and pickup. There is a shortage on lots of things . The building here is like the San Francisco bay area in the 1960s. There isn't an open field that isn't being developed.

 

[wpod]

I have more parts on backorder than I have ever had in my history of selling parts. I think at last count it was 192 part numbers with most not having an ETA off backorder. When I put orders in to Ford I number them with the date and 1 for special orders, 5 for stock orders. The system wouldn't let me create 04211 today because there was still a part open on that order from last year.

Are your customers upset?

 

[UncleDave]

I have more parts on backorder than I have ever had in my history of selling parts. I think at last count it was 192 part numbers with most not having an ETA off backorder. When I put orders in to Ford I number them with the date and 1 for special orders, 5 for stock orders. The system wouldn't let me create 04211 today because there was still a part open on that order from last year.

We are hovering right at the 5M dollar mark highest in 26 years.

 

[JeffKeryk]

At least in semiconductors, the supply chain was disrupted by chip buyers (auto makers for example) forecasting a big slowdown last year.
In many cases their forecast was wrong, but their JIT materials orders were already in place causing slow down and disruption.
Cars use complex chips for things like AP and older, less complex chips for other components.
So both are in shortage now.
It will take time and even new foundries to supply the pent up and new demand.
There is good talk of new fabs in America, reversing the 25 year offshore trend.

 

[supton]

At least in semiconductors, the supply chain was disrupted by chip buyers (auto makers for example) forecasting a big slowdown last year.
In many cases their forecast was wrong, but their JIT materials orders were already in place causing slow down and disruption.
Cars use complex chips for things like AP and older, less complex chips for other components.
So both are in shortage now.
It will take time and even new foundries to supply the pent up and new demand.
There is good talk of new fabs in America, reversing the 25 year offshore trend.

I think I've heard of that, bringing back foundries. Not sure how, they are expensive. But we'll see.

You can't make PCB assemblies without laminate material, passives or IC's. I haven't heard of issues with getting laminate material but sure have for passives. [Actually parts have come and gone for years, new generations of parts come out and displace old p/n's, nothing new, but there has been some wild fluctuations lately, making ordering a bit more tricky.]

 

[KrisZ]

If anything, this "pandemic" highlights how delicate the global economy really is and how easily pretty much all economies around the globe can be affected, dare I say manipulated? The situation would've been a lot better if we were actually making things, instead of importing.

 

[JeffKeryk]

The cost of a new wafer fabrication plant, aka fab is about $2B brick and mortar. Lotsa chemicals and clean room requirements. The amount of stainless tubing for the gasses is off the charts.
Then, you need about $3B for a manufacturing line to process wafers into chips. More for the advanced tech node, less for older machines. The refurb deposition business, for example, is huge.

And yes, there is talk of on-shoring fabs. But that gets political; no need to go there.

 

[Schmoe]

My wife is an RN on Oklahoma City, she's been telling me that getting supplies right now are almost impossible unless it is a life threatening condition.

 

[PandaBear]

I think I've heard of that, bringing back foundries. Not sure how, they are expensive. But we'll see.

You can't make PCB assemblies without laminate material, passives or IC's. I haven't heard of issues with getting laminate material but sure have for passives. [Actually parts have come and gone for years, new generations of parts come out and displace old p/n's, nothing new, but there has been some wild fluctuations lately, making ordering a bit more tricky.]

We have fabs in the US (Texas I think has a Samsung fab), they are just not the latest because other places (Taiwan, S Korea) have gov backing to pay for it whereas we are just buying and paying for the everyday low price.

Having a 3rd source in the US would help reduce the risk, and reduce pricing due to competition. If Intel can use US fab for their CPU then either they or someone else (TSMC) can as well. The main cost is the equipment and local gov can always waive the sales tax on them to lure investment.

 

[PimTac]

Even simple goods are getting scarce. I went looking at socks yesterday at my local Wally’s and the racks were pretty sparse.

 

[PandaBear]

The cost of a new wafer fabrication plant, aka fab is about $2B brick and mortar. Lotsa chemicals and clean room requirements. The amount of stainless tubing for the gasses is off the charts.
Then, you need about $3B for a manufacturing line to process wafers into chips. More for the advanced tech node, less for older machines. The refurb deposition business, for example, is huge.

And yes, there is talk of on-shoring fabs. But that gets political; no need to go there.

I remember reading somewhere that some of the equipment companies now make more money refurbing and servicing equipment than selling new ones. I also heard that a DUV stepper is 20M and the latest fab for those processes are about $20B total.

I think without being political, most industries want to have at least 3 suppliers (up to 5) for most critical parts for stability and pricing reasons, then they also want at least 2-3 continents sourced parts for disaster recovery reasons (i.e. Fukushima, Thailand flooding).