On: Global chip shortage may soon turn into an oversupply crisis

[jdrc]

maybe if our supply chains were't Just-in-time we wouldnt be talking about these all the time

[adam_arthur → jdrc]

Think we are well past that. Even if these companies had huge stockpiles, they would have been depleted long ago.

No company is going to hoard multiple years worth of inputs. Supply has remained high in semiconductors too, it's more of a demand than supply problem. But of course, elevated demand and normal supply leads to shortages just the same as normal demand and shortened supply.

Retail Sales:

https://fred.stlouisfed.org/series/RSXFS

[xondono → adam_arthur]

Maybe, but part of the issue is the massive shift of component stocks from suppliers to manufacturers.

JIT allowed a lot of different manufacturers to “share” stocks, by keeping inventory in a supplier instead of in house.

In the end we traded in risk tolerance for better efficiency, and most companies are now doing the opposite trade.

> No company is going to hoard multiple years worth of inputs.

I actually work with companies who have done this.

[skybrian → jdrc]

Long term contracts are important. The buyers who had them didn't have to scramble so much. That doesn't mean stockpiling, necessarily.

[tonyedgecombe → jdrc]

I hope not, I like the cheap goods that just-in-time produces.

If you look back at what many were saying at the start of Covid you would have thought we would have all been eating our neighbours by now. The reality has been completely different, an artificial shortage of toilet paper and a slight tightening of supply on consumer goods. If anything this tells me our supply chains are quite robust.

[wyager → jdrc]

There are a lot of things we could have done differently to prevent the current issues. Reducing capital efficiency by requiring massive stockpiles isn't necessarily at the top of the list of good ideas. I'm not saying it's a bad idea, just that this isn't necessarily the first thing we want to jump to across the market.