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Oct 7, 2021
11:53:18am
OyajiCoug Contributor
I know this was somewhat joking, but I get asked about it a lot and find
it kind of fascinating. Some here might too so here is some (too much?) info. I know some on here are more familiar with supply chain management and probably have better info than my view.

Start with semi-conductors because that is a huge topic now.

- 54% of global chips are from one supplier (TSMC in Taiwan)
- Automotive only uses about 2-3% of global chip supply
- When Covid hit, OEMs (car manufacturers) shut forecasts waaay down.
- Other areas (laptop, IOT, home electronics) demand skyrocketed; so suppliers allocated everything to those areas and actually were running at higher production levels than pre-pandemic
- BUT then stimulus money hit and everybody decided to buy a car; the OEMs started to demand chips that were no longer available
- Then other "natural" force majeure events hit
- Renesas, another large manufacturer (Japan), got hit by an earthquake. Then later a fire. Terrible timing.
- Drought hit Taiwan and put TSMC plants in jeopardy.
- Texas storms hit.
- OEMs are supplied by Tier 1 companies. If a Tier causes an auto manufacturer to "line down" due to lack of parts, they can be responsible for damages of millions per day (!!)
- So the Tier 1s started pumping their forecasts up to 300% of normal need to not be caught short; suppliers of chips have obligations to divvy out supply across their customers during shortages to provide "fair share" supply, so the Tiers artificially increased forecasts hoping to get a larger "fair share" and manufacturers are now trying to know what that really is
- Think of it like TP from Costco - everybody hoarding because they are afraid of being caught short.
- Due largely to the above (plus shortages in other areas) the auto industry recently re-adjusted forecasted profits down more than 200 Billion for the fiscal year

Not just semiconductors
- straws, lumber, steel, condiments (home bbq demand), all kinds of others; one that I find kind of funny is chicken - a LOT of people eating chicken at home so now there is a shortage of wings and tenders at restaurants causing them to remove from their menus and prices to go up.
- Gas is another fascinating one - there isn't a shortage of fuel but their is a shortage of qualified tanker truck drivers. A lot retired through the pandemic for various reasons.
- Shipping container shortages
- A US plant that supplies the large majority of US chlorine tablets burned down - boom chlorine shortage

Now we have the electricity rationing in China, continued labor shortages globally and at US ports, etc. Basically everybody expects shortages to continue at peak and probably get worse through 1Q 2022. Global connection of supply chains, JIT, lean manufacturing, sole sourcing are all stressing the supply chains and we are in the middle of a perfect storm.
This message has been modified
Originally posted on Oct 7, 2021 at 11:53:18am
Message modified by OyajiCoug on Oct 7, 2021 at 12:00:48pm
Message modified by OyajiCoug on Oct 7, 2021 at 12:21:26pm
OyajiCoug
Previous username
skeeter
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OyajiCoug
Joined
Nov 21, 2003
Last login
Mar 28, 2024
Total posts
999 (2 FO)
Related Threads Topic: Other than the obvious (Biden, Gates, the Queen) who can I blame for our failing (oxcoug, Oct 7, 2021 at 11:14am)

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