Fixing a Tiny Corner of the Supply Chain
bunniestudios.com
bunniestudios.com
- Chipmaker/Distributor quotes 36 weeks for the parts, we arrange all shipments of all components to the factory based on that date since that part had the longest lead time (~80 unique part numbers in product). 4 weeks later, parts arrive at factory!. We have to wait for all other components for another 32 weeks. Manufacturer does not understand why we're mad since they shipped early!
- Distributor accepts order for a 10ppm MEMS oscillator. After 6 months of silence, we contact the manufacturer directly and they confirm that 10ppm parts will not be manufactured for at least another year since they are prioritizing 50ppm parts.
- Microcontroller manufacturer quotes ~2 years(!) for a part. The brokers have it in stock, and quote approximately 20 times the usual pricing (with a date code of 2021 to rub it in!)
- FPGA manufacturer accepts order for 500pcs, with a lead time of 48 weeks (ok!). After 30 weeks, manufacturer increases pricing for 20% for all orders, including open, active orders. They offer us to cancel the order if we want!
- Analog IC manufacturer announces that they will increase pricing of all products, including all open and active orders, but they can not tell how much of an increase it will be until..... until they are ready to announce I suppose.
- Chip manufacturer sells a chip through its own web page only. Part is currently not defined in any distributors so you have to use their web site. Chip is currently not in stock. However, their order system does not accept back-orders(?!). You have to check back "often" to catch the exact moment when this chip becomes available.
... the list goes on and on ...
Ah, so true! It shows nicely why predictable but longer lead times are better than potentially shorter ones that are totally chaotic. Being to properly plan is such a huge factor.
The value of the shipments is way way down too, instead of seeing a few hundred thousand dollars of ICs in a shipment, tens of thousands of ICs, I'll see tens of thousands of dollars of ICS in a shipment with the count in the thousands because, presumably, that's all that can be had.
I also notice HDD, SSD, and flash cards/USB storage imports seem to be way, way, down - presumably because they contain ICs as well.
What you say is somewhat surprising to me. I would imagine the total flow of components would be similar, but would be concentrated to certain destinations/buyers.
If cross-border trade of chips are actually in the decline, that suggests the components are being manufactured in lower quantities (highly unlikely), or they are staying close to and being consumed by (or, maybe hoarded and stocked at) where they are being manufactured.
Yes. I clear freight for IND, OAK, EWR, MEM and a few other ports.
> that suggests the components are being manufactured in lower quantities
Eh, to me it suggests people are taking delivery as soon as they can of whatever they can get and that factories are possibly giving more priority to companies in their own country over international customers.
Another example: with the high gas price in Europe I feel more incentive to use more clothing, do more sports (increases blood circulation / body temp), and less electricity/gas. I don't want to force it upon my young children though, but I can afford the higher gas price. If you can't, you have to adapt.
I finally got around to reading the excellent Logitude by Dava Sobel (https://www.goodreads.com/book/show/4806.Longitude) and to a lay-person this sounds like a similar principle that Harrison applied to design the bimetallic strip used to preserve the accuracy of his clocks in the face of temperature changes (https://en.wikipedia.org/wiki/Bimetallic_strip). Very cool.
Could civilization actually end like this? Not in a big bang but slowly grinding to a halt because no one knows how stuff works besides some nonfunctional web forms?
also, I did have to go without my preferred brands of couscous and fresh olives for some months, so as far as i’m concerned the end was nigh
Speak for yourself. A branch of my extended family all starved to death, together with lots of people in their town, and I was talking to them every day, but still couldn't get them food in time.
It likely wouldn't have happened without the pandemic. Staple food prices have gone up a lot (like more than double in some regions), and availability gone way down because the one guy with the truck decides to not deliver to the more remote regions cos he's making more money now doing more local deliveries.
Do you have thoughts on what could have prevented this at a system level?
People at those margins then die when conditions change. I wish those people weren't family. But if it weren't them, it would have been someone else.
May I ask which country this happened in?
I'm sorry for your loss. I can't imagine a whole branch of the family tree dying.
Can you say where this happened?
The people working the line in the factory need to go to the factory. However my company was paranoid that something would happen to them. If enough people working the line get sick production stops and then all profit stops. By contrast if a lot of people not on the line are sick but production continues - over a year is balances out.
Notice how we have a backlog of ships to unload and not empty ships? That’s because factories continued operations.
Maybe Hacker News was able to stay home for months but none of my friends making minimum wage--sorry, essential workers--ever got a break. I think you're dramatically overestimating how many people actually got to stay home and for how long. And obviously there's big class divisions between who does and doesn't get to stay home as well
You just summarized the Idiocracy plot.
But you do have a point... just look how much money companies are willing to shell out for IBM mainframes (new hardware that has cycle-accurate emulation of 70s-era hardware) or for pensioners who lived and breathed COBOL. So many large-scale IT projects in government or corporations fail because of the boatload of undocumented assumptions and edge cases that have been built up over many decades, or don't even get started because of the effort that a migration brings.
No.
I'll give you a clear counter-example: my iPhone 13 mini.
Go read an iFixit teardown of any advanced product like that. Many state-of-the art chips, many suppliers, a huge logistics effort.
And yet Verizon managed to send me one of the damn things just a few days after I ordered, shortly after the phones were introduced.
Sure, some people trying to fund their product using kickstarter have problems, but the big boys can build and deliver hundreds of millions of "supercomputers" per year.
You'll be interested in this talk, "Preventing the Collapse of Civilization"
And it shows the one point I always try to drive across: Logistics and Supply Chain is a people business. No amount of ML, algorithms and cooperation / collaboration tools can change that. If things get hairy, pick up the phone and talk to people. Even better, use 21st century tech to automate routine stuff and use the free time to talk and build relationships with people at your supplier or customers.
I am all in for using those tools so, but with discretion. E.g. if optimization software comes up with lower safety stock levels than what you have, use those. If the calculated levels are higher than actual ones, stick with the actual ones.
I highly doubt so, that companies that failed to control their supply chains properly pre-COVID disruption would be able to benefit from increased insight into sub-tier suppliers. Those that do benefit from that insight are those that were already better than most before and will be even better after those insights are gained. One of the reasons nobody seems to be able to catch up to the likes of Apple, Amazon or Proctor&Gamble.
Edit: ok let me show how little I understand or have thought about this.
Its possible for every primary producer to create a new "chain" for each of its products. For factories this is in the bounds of possible. At this point everyone who touches it could use a public / private key hand off to confirm receipt and then append to the chain. I suspect this will hit massive problems that I don't know about, but the principle makes sense. I do not know if the incentive align - but globally the idea of being able to track every single manufactured good across the world seems like it should be profitable.
Also, supply chains are made up of often times competing players. The amount of insight one could gain on other companies from a comolete blockchain is, IMHO, a big hinderance as well.
but the value to every other player in the supply chain is so high, it feels inevitable
And we didn't even talk about meatspace issues yet: Things disappear, get stolen, lost, destroyed, dissolve, companies change ownership, move to other locations, bribe, steal, commit fraud, get banned from selling things somewhere... it's a huge mess! Now sure, all of that isn't directly related to a supply chain. But on a global scale, a supply chain is always just an incredibly limited view of a network of goods moving from A to B. To prevent reality in the blockchain drifting apart, you'd need a way to model all of this.
In the meantime, I'd much rather see simpler solutions: Nobody seems to have tried printing QR codes on physical products that contain PrivKey-signed manufacturing information, for example.
2. > I finally do the “unthinkable” in the web age – I pick up the phone, and dial in hoping to reach a real human being to plead my case. I dial the extension for the custom department sales rep. It drops straight to voice mail. I call back again, this time punching the number to draw a lottery ticket for a new sales rep.
He should have done this at the start. When it comes to supply chain problems it’s usually always a people problem. The first thing you do as soon as you get an undesirable result from email is pick up the phone and have a conversation.
It works pretty much every time.
If there's anything I've gained from this hellish year+ of building hardware, it's a much more frank and open relationship with our various CMs and distribution reps. These problems are none of their faults, and in many cases they've gone to ridiculous lengths to keep us (a relatively small fish) afloat.
I have never seen this before... I would expect the parts to either be factory programmed (and marked), or programmed by the customer (For example, the oscillator starts at 1 Mhz, and then you do some odd handshake to change the rate.).
Are there any other parts programmed at distributors? If this is a rare thing, I can completely see how the stock control mechanism can't cope with one part number incoming to the warehouse, but many different ones exiting...
That said, while I generally support his hardware manufacturing ideas, it's exceptionally hard to compete in this space against the largest electronics companies and against Asian manufacturing. As someone who also used to be involved in North American electronics manufacturing, there are so many factors, from local environmental regulations to the large network effects in Shenzhen, that it's almost impossible unless you have something truly novel and brilliant marketing. Good luck to Bunnie, I hope it works out.
Finally, let me just comment on the magnificent customer service of Digikey. If I ever had to source anything electronic, I would use them again in a heartbeat, to the point where I would use them over cheaper alternatives, because they are so good.
Calling them up in CONUS and getting a real human, normally with a strong “Bobby’s World” yooper accent, who speaks flawless and rapid NATO Phonetic Alphabet and rattles off your part numbers back to you to double check them … perfect.
I think this market is up for disruption once somebody brave enough appears and enters the market, starting from the software side.
I could imagine either dirt cheap labor in well laid out warehouses or some form of automated picking solution.
i'd love to see a proper dive/writeup from someone in-the-know. lacking that, here's a third, completely speculative theory:
from what i hear, these big distributors are excellent at providing quick turnaround time. suppose that in order to guarantee this for large customers -- who presumably provide the bulk of revenue and who most value this service -- DigiKey must continually over-provision its operations. and so whenever there isn't a number of outstanding rush orders, there's extra staff available, at no marginal cost to the business, to assist the little guy.
I sometimes feel bad having to order a 3 cent part at Farnell/Element14. Which is then packed and shipped from the UK to the Netherlands without any handling or shipping fee. Usually it is delivered within 1 business day.
That said, they are treating a 3 cent part equal to a 100.000 dollar piece of equipment, which probably makes financial sense for them. Its the consistency that I, as a professional customer am willing to pay for. Farnell has become my one-stop-shop when it comes to parts and tools, I may be able to get something cheaper elsewhere, but the convenience and speed make up for that.
Starting from the software side doesn't help very much, when you need enormous amounts of capital to build up initial inventory.
I've often wondered why no one offers something like this as a service. People who want to order a small quantity of some item with a large minimum order size could register their interest somewhere, and others who are interested could add themselves to their order, until the necessary threshold was reached.
Presumably the problem is one of scale, as the service would need millions of registered users in order to have a chance that enough of them all wanted the same thing at the same time.
For that reason, though, I'm surprised that Amazon hasn't offered this yet. If there's a product that sells as a box of 100 identical items, and you only want 1 or 2, you should be able to click a button that says "Let me join a group to order this product", and Amazon could charge a fee to split open the box for you and re-ship the individual items to the various members of the group.
It looks like it's more about enthusiasts buying specially designed niche products, rather than casual consumers buying a small portion of a large batch of low-value items, but it's an interesting site nonetheless, thank you.
Well, it might be that now, and that might be what they show on their front page, since it’s very striking. But IIRC, that’s not what Massdrop was originally for. See here:
https://web.archive.org/web/20120307051310/http://massdrop.c...
https://web.archive.org/web/20120403101317/http://massdrop.c...
Part of the problem for doing it with other things is likely regulations and labeling. Back near the start of COVID I heard stories about how there was lots of cheese in bulk packs which couldn't easily be repurposed into consumer-friendly sized units (most normal consumers don't want to buy in units of cubic feet of cheese in the USA). Part of the reason it couldn't easily be repurposed was simply that no one had ever created a consumer-sized package label for it. So not only did the cheese need to be handled again, packaged again, but it also had to be relabeled and approved by what ever agencies approve or rate cheeses.
This is a trade off - some factories are more flexible than others. However if you can fill both sizes of containers (in reality there are more than two sizes, but for simplicity I'll use two) that means half the time the jigs needed for the one size are not in use - but they still need to be cleaned and such. You can't even skip cleaning because harmful bacteria doesn't care that it wasn't use much - in fact you might need to clean more often if the constant movement isn't flushing insignificant amounts away.
Some parts have MOQs, I guess distributors don't see the business value in buying reels to sell a chip or three if it's reasonable to expect that the rest of the reel will sit on shelf for months (or worse).
They are incredibly, almost unbelievably helpful.
They've more than earned my business as my primary distributor.
> the parts are shipped to Digikey as blanks, and they have a machine that can program the parts on-site
What is going on here? Is the thing that there is a picture of earlier in the blog post (the two chips bonded together with some other parts surrounding it) a piece that can do many different jobs and be sold as many different SKUs??