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That's not the issue here. The issue is automotive are capricious, nasty customers. They know they're a big contract so they dictate disgusting terms, like 9 mo

That's not the issue here. The issue is automotive are capricious, nasty customers. They know they're a big contract so they dictate disgusting terms, like 9 month payment terms and extremely strict delivery windows and changing deliveries on very short notice. Suppliers get fined at certain auto manufacturers for not delivering within a 15 minute window, forcing their truck drivers to circle around the facility for hours to ensure they can meet that. The carmakers require extreme delivery flexibility from their suppliers on short notice. In effect, they're still holding stock, but they're forcing their suppliers to hold it for them, and without said suppliers getting paid, or even having the ability to plan for how much they'll get paid. Because of those extremely hostile contract terms, the carmakers could just turn around and go "oh yeah, all that stock we said we'd order this year, you can make it if you like but we're not going to take deliveries or pay for it" which is what set this whole pile of bullshit in motion. At that point, their suppliers were holding and/or producing lots of stock for them, but got informed they would not be getting paid for it, had to cut their losses, and this ended up disrupting manufacturing for months as lines had to be reconfigured mid-batch and a lot of product got scrapped. While this was happening, the automotive fuckers changed their minds and requested more, meaning the suppliers had to scramble to produce with now limited resources because the scrapped stuff was still clogging the pipeline, so resources got redirected away from every other part. In short, religious JIT could only have this kind of impact here because the automotive companies are absolute shits to their suppliers and could force them to jump one way and then the other, causing disruption upstream which then spread downstream to everyone using electronics. This is a purely artificial crisis caused by the car manufacturers and is not an inevitable consequence of either the pandemic or the logistics disruption. Air cargo is barely affected and semiconductors and their precursors (except for water) are light and easily transportable by air, and certainly valuable enough that this does not impact their cost. This is a problem that would not have existed without the automotive industry, covid or no covid. They brought this upon themselves, and now everyone else is suffering (and auto execs go on TV and blame work-from-home and remote education for the shortage, which is just adding insult to injury). Screw them.

hef19898 5y ago
Pretty sure 9 months payment terms are illegal in the EU, everything above 90 days is an issue already. Not defending the supplier squezzing that auto OEMs conduct. Also, trucks aren't circling around facilities, they are waiting at parking lots. Seriously, I don't know what kind of axe you have to grind with automotive and JIT. It does seem to be a larger issue if it is affecting all industries, and all companies. Chip shortages are affecting Aerospace, Google reportedly has issues getting chips as well for things like the Pixel 4a. Also I am not sure if you have hands on experience with SCM or procurement, automotive or otherwise.
- Kliment 5y ago
  I've spoken to suppliers who had 9 month payment terms to automotive (and other transport, train manufacturers are just as bad) customers. The law change in the EU was triggered by exactly such excessive contract terms. They're still common in other areas where regulators have not yet stepped in. I know the area where the factory in TFA is based, and I can tell you they don't have nearly enough parking space for deliveries, which is one reason they insist on tight delivery windows. I happen to know truck drivers and they hate this arrangement as in practice this means they have to plan to get there way earlier and then either park on the side of the road or circle around. All nearby truck parking facilities are perennially full. These factories have a habit of externalizing this kind of additional costs to suppliers and simultaneously squeezing them for price, not to mention causing broader damage to society by clogging the roads and parking facilities, but that's beside the point. And yes, I happen to have hands on experience with procurement and sourcing. I've been redesigning customer projects around missing parts all year. Every industry is affected, but it's automotive which started it, and caused suppliers so much damage. This is what suppliers tell me and I have no reason to distrust them. My axe to grind is that I'm now dealing with the fallout.
  - hef19898 5y ago
    Did automotive start it, or was automotive just hit first? I don't know, and I think might take a while until we know. I have to agree that 9 months payment terms are unacceptable. That truck yards at warehouses and factories are full has more to do with bad yard management, or non at all. That is less a problem with JIT or procurement, instead it is a purely operational issue. That us in SCM and logistics, incl. procurement, have tendency to push issues down to lower tiers is true. it is also true that logistics and transportation is offloading a lot on public infrastructure. Does it have to be that way? On the one hand, yes. Roads are public, railway lines more often that not as well (to an extent that is). That's what taxes are there for, because indirectly everyone if profiting from a running economy. Again, that is less the case in developing countries and should change. I also agree, and that is maybe even more important when it come to the environment at large, SCM should prioritize environmental and climate protection more, along with social standards. That won't happen so until it is financially beneficial to do so. This is a general issue with capitalism running rampant so. Chemical plants giving a shit about worker health and safety or the environment is as old as chemical manufacturing., just as an example.

hef19898 5y ago

Pretty sure 9 months payment terms are illegal in the EU, everything above 90 days is an issue already. Not defending the supplier squezzing that auto OEMs conduct. Also, trucks aren't circling around facilities, they are waiting at parking lots. Seriously, I don't know what kind of axe you have to grind with automotive and JIT. It does seem to be a larger issue if it is affecting all industries, and all companies. Chip shortages are affecting Aerospace, Google reportedly has issues getting chips as well for things like the Pixel 4a. Also I am not sure if you have hands on experience with SCM or procurement, automotive or otherwise.

Kliment 5y ago
I've spoken to suppliers who had 9 month payment terms to automotive (and other transport, train manufacturers are just as bad) customers. The law change in the EU was triggered by exactly such excessive contract terms. They're still common in other areas where regulators have not yet stepped in. I know the area where the factory in TFA is based, and I can tell you they don't have nearly enough parking space for deliveries, which is one reason they insist on tight delivery windows. I happen to know truck drivers and they hate this arrangement as in practice this means they have to plan to get there way earlier and then either park on the side of the road or circle around. All nearby truck parking facilities are perennially full. These factories have a habit of externalizing this kind of additional costs to suppliers and simultaneously squeezing them for price, not to mention causing broader damage to society by clogging the roads and parking facilities, but that's beside the point. And yes, I happen to have hands on experience with procurement and sourcing. I've been redesigning customer projects around missing parts all year. Every industry is affected, but it's automotive which started it, and caused suppliers so much damage. This is what suppliers tell me and I have no reason to distrust them. My axe to grind is that I'm now dealing with the fallout.
- hef19898 5y ago
  Did automotive start it, or was automotive just hit first? I don't know, and I think might take a while until we know. I have to agree that 9 months payment terms are unacceptable. That truck yards at warehouses and factories are full has more to do with bad yard management, or non at all. That is less a problem with JIT or procurement, instead it is a purely operational issue. That us in SCM and logistics, incl. procurement, have tendency to push issues down to lower tiers is true. it is also true that logistics and transportation is offloading a lot on public infrastructure. Does it have to be that way? On the one hand, yes. Roads are public, railway lines more often that not as well (to an extent that is). That's what taxes are there for, because indirectly everyone if profiting from a running economy. Again, that is less the case in developing countries and should change. I also agree, and that is maybe even more important when it come to the environment at large, SCM should prioritize environmental and climate protection more, along with social standards. That won't happen so until it is financially beneficial to do so. This is a general issue with capitalism running rampant so. Chemical plants giving a shit about worker health and safety or the environment is as old as chemical manufacturing., just as an example.