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>Covid supply chain issues didn't help It would be nice to get to the bottom of these issues I keep hearing about. Yeah, COVID was/is a big thing but when it c

>Covid supply chain issues didn't help It would be nice to get to the bottom of these issues I keep hearing about. Yeah, COVID was/is a big thing but when it comes to feet on the ground, what's the impact? Not this much surely. Not to be conspiratorial but is this a cover story we're being given? Why does it feel like there's suddenly this massive void in productivity?

manwe150 5y ago
There was a large spike in unemployment in the US/worldwide. Combining that with drastic shifts in consumption patterns, causing a ripple effect in delayed production changes. And perhaps also shortages are just getting more attention right now, simply because people are looking at them more?
thanatos519 5y ago
On the contrary. It's a cover story being blown. The system was already operating at the edge of its capacity, and now it's toppling over.
capableweb 5y ago
There has been 5,443,453 deaths from COVID-19 so far, with no end in sight. Just counting the deaths, that's a pretty large impact from something that just appeared two years ago. Not to mention the psychological impact the pandemic has on humans, which is even more than just counting the deaths. This is why productivity is falling off a cliff. Everything changed underneath our feet and people are starting to feel the long-term effects of having a virus lurking around every corner.
- martin_a 5y ago
  To add to this: Even if you're not killed by Covid, infections will usually result in you being quarantined for two weeks (speaking of 2020 numbers) which created HUGE problems with DHL for example. There were simply no drivers for all their trucks to get stuff moving around (in Germany e.g.). This had a huge impact on logistics, for example.
- rubidium 5y ago
  Perhaps… but has nothing to do with the chip shortage.
  - capableweb 5y ago
    How can you be so sure about that? COVID, either by first-order effects or by second-order effects, is affecting almost everything in the world right now, why not the chip shortage too?
  - vineyardmike 5y ago
    I'm sure no one in the chip industry died (or got sick). And no one in an industry that supplies chips. And no one in an industry that buys chips. And no one in a service industry that services the employees of the above industries. /s. Its global. Its everywhere. Every industry will have impact simply due to huge disruptions to everyone. Tons of people got died, and many more got sick, and subject to lockdowns, and saw their purchase patterns change (eg. toilet paper). Directly, the IC industry changed when people had to purchase laptops and monitors and webcams for their at-home employees. That is a huge surge in demand that was a 1-time thing, but all those office supply orders are still depressed, so anyone making things has to re-tool their factory.
- akimball 5y ago
  Accounted deaths are a fraction of actual. The Economist used a pretty good model to estimate 15.3mm excess deaths globally back around November
yokaze 5y ago
My guess: It is lowered expectations, and people accept the excuse. So, what would you tell your customers, if you can't deliver on time?
- c7DJTLrn 5y ago
  Same thing with Brexit really. An easy excuse to reach for.
wldcordeiro 5y ago
A lot of it has been that COVID exposed how many industries were relying on Just In Time fulfillment so then when the demand spiked because people were home isolating the supply wasn't there. I recall a particular story about the toilet paper industry explaining that.
kube-system 5y ago
We have just-in-time inventory at all levels of the supply chain. China was shutting down highways between major cities and forbidding people to go out on the street in the earlier parts of the pandemic. I'm surprised the ripple effects haven't been worse. To turn silicon crystals into a PS5 requires multiple steps in the supply chain which, when running smoothly, have multiple steps where people may be planning years in advance. Sony builds their products out of dozens of components from different suppliers, which themselves may be made out of finished materials provided by other manufacturers, which in turn may be made out of chemicals or raw ingredients from other companies. The dependency tree is quite big, and if any of them are messed up, you can't finish your product. Normally all of these dependencies are planned well in advance (quarters or years) so that everything is ready when the time comes to ship. Mess it up one level deep, and you're a quarter to a year behind. Mess it up two levels deep and you're two quarters to two years behind. On top of this, semiconductor production was already stressed to its limits before COVID.
noodle 5y ago
> what's the impact? Not this much surely. Yes, this much. I saw someone explain this well enough on reddit, but I can't find a link so I'll try and paraphrase it. Let's say you're a lumbermill and you run at 100 boards a day in normal times, with enough capacity to do 110 boards a day if you stretch. COVID shut you down for 3 months. You now have a 9000 board deficit from your normal production, with people lined up to buy the boards before you've produced them. Once you get started again, you crank up capacity to 110/day - it takes you 900 days - almost 2.5 years - to recover that original shutdown deficit, without accounting for any of the increased demand for your product. This is roughly what other industries are experiencing. "Why don't you just make a new factory to increase your production?" well, it would take a long time to do that, would take a lot of capital, the shortages impact you too, and there's no guarantee that once COVID passes, demand won't go back down to 100 boards/day leaving you with a huge unnecessary capacity. A simple example, of course, but this kind of thing is happening in some form or another in most industries, and will just take some time to work itself out.
- vineyardmike 5y ago
  Great example! Easy to understand, and clearly away from any "conspiratorial" answer. Just to tack onto it... > Once you get started again, you crank up capacity to 110/day - it takes you 900 days - almost 2.5 years - to recover that original shutdown deficit, without accounting for any of the increased demand for your product. This is best-case scenario. Likely is that a few % of your workforce will have been out sick with covid (or even passed away), and a few % of your workforce may have quit to care for family, or quit for better pay elsewhere, etc. So your "work extra hard to hit 110/day" is more likely "work extra hard to stay at 100% or even 90%". Especially limiting if you need to buy parts for your output that may be delayed due to others who are behind.
  - noodle 5y ago
    For sure - my example is just a very basic one to show how easily most industries can slide into a hole that takes time to dig out of even under good conditions. The reality is even more complex.
gabriel_fishman 5y ago
In 2020 I was working for a consumer electronics company and went to some presentations on how our supply chain and operations teams were dealing with the pandemic. I'm far from an expert on this, but this is what I heard from people who were working on this. First, you had a massive lockdown in China in January 2020, which shut factories temporarily. Then when those factories came back online, the production lines had to be reconfigured so that stations were 2 meters apart. At the same time, a lot of the collaboration that typically happens by people from a company flying out to China to meet with the supplier face-to-face were shifting to video, which frequently met that at least one side of the call was early in the morning or late at night. And as all of that was happening, there were also large shifts in demand as some products saw spikes in orders. That pattern then repeated itself across the world - a company might move production from China to, say, Indonesia, only to see the new factory have to temporarily shut down. I can imagine that two years of this would create major backlogs and disruptions.
chasd00 5y ago
imagine a quickly moving but congested highway. anyone even tapping the breaks will cause a massive slowdown. I think the chip supply chain is similar.
HWR_14 5y ago
> what's the impact? Not this much surely. A few months ago there were seventy billion dollars of goods anchored off of LAs docks alone. Some of those were finished goods, but some are intermediate goods. It's so bad that it's cheaper to make new shipping containers in China than spend the time to return them once they've been used once. We have a glut of practically new containers clogging up our infrastructure. Even as COVID stopped causing the direct backups, backups propagate all on their own. Like a giant traffic jam and you get to the front and the accident was cleared hours ago.

manwe150 5y ago

There was a large spike in unemployment in the US/worldwide. Combining that with drastic shifts in consumption patterns, causing a ripple effect in delayed production changes. And perhaps also shortages are just getting more attention right now, simply because people are looking at them more?

thanatos519 5y ago

On the contrary. It's a cover story being blown. The system was already operating at the edge of its capacity, and now it's toppling over.

capableweb 5y ago

There has been 5,443,453 deaths from COVID-19 so far, with no end in sight. Just counting the deaths, that's a pretty large impact from something that just appeared two years ago. Not to mention the psychological impact the pandemic has on humans, which is even more than just counting the deaths. This is why productivity is falling off a cliff. Everything changed underneath our feet and people are starting to feel the long-term effects of having a virus lurking around every corner.

martin_a 5y ago
To add to this: Even if you're not killed by Covid, infections will usually result in you being quarantined for two weeks (speaking of 2020 numbers) which created HUGE problems with DHL for example. There were simply no drivers for all their trucks to get stuff moving around (in Germany e.g.). This had a huge impact on logistics, for example.
rubidium 5y ago
Perhaps… but has nothing to do with the chip shortage.
- capableweb 5y ago
  How can you be so sure about that? COVID, either by first-order effects or by second-order effects, is affecting almost everything in the world right now, why not the chip shortage too?
- vineyardmike 5y ago
  I'm sure no one in the chip industry died (or got sick). And no one in an industry that supplies chips. And no one in an industry that buys chips. And no one in a service industry that services the employees of the above industries. /s. Its global. Its everywhere. Every industry will have impact simply due to huge disruptions to everyone. Tons of people got died, and many more got sick, and subject to lockdowns, and saw their purchase patterns change (eg. toilet paper). Directly, the IC industry changed when people had to purchase laptops and monitors and webcams for their at-home employees. That is a huge surge in demand that was a 1-time thing, but all those office supply orders are still depressed, so anyone making things has to re-tool their factory.
akimball 5y ago
Accounted deaths are a fraction of actual. The Economist used a pretty good model to estimate 15.3mm excess deaths globally back around November

yokaze 5y ago

My guess: It is lowered expectations, and people accept the excuse. So, what would you tell your customers, if you can't deliver on time?

c7DJTLrn 5y ago
Same thing with Brexit really. An easy excuse to reach for.

wldcordeiro 5y ago

A lot of it has been that COVID exposed how many industries were relying on Just In Time fulfillment so then when the demand spiked because people were home isolating the supply wasn't there. I recall a particular story about the toilet paper industry explaining that.

kube-system 5y ago

We have just-in-time inventory at all levels of the supply chain. China was shutting down highways between major cities and forbidding people to go out on the street in the earlier parts of the pandemic. I'm surprised the ripple effects haven't been worse. To turn silicon crystals into a PS5 requires multiple steps in the supply chain which, when running smoothly, have multiple steps where people may be planning years in advance. Sony builds their products out of dozens of components from different suppliers, which themselves may be made out of finished materials provided by other manufacturers, which in turn may be made out of chemicals or raw ingredients from other companies. The dependency tree is quite big, and if any of them are messed up, you can't finish your product. Normally all of these dependencies are planned well in advance (quarters or years) so that everything is ready when the time comes to ship. Mess it up one level deep, and you're a quarter to a year behind. Mess it up two levels deep and you're two quarters to two years behind. On top of this, semiconductor production was already stressed to its limits before COVID.

noodle 5y ago

> what's the impact? Not this much surely. Yes, this much. I saw someone explain this well enough on reddit, but I can't find a link so I'll try and paraphrase it. Let's say you're a lumbermill and you run at 100 boards a day in normal times, with enough capacity to do 110 boards a day if you stretch. COVID shut you down for 3 months. You now have a 9000 board deficit from your normal production, with people lined up to buy the boards before you've produced them. Once you get started again, you crank up capacity to 110/day - it takes you 900 days - almost 2.5 years - to recover that original shutdown deficit, without accounting for any of the increased demand for your product. This is roughly what other industries are experiencing. "Why don't you just make a new factory to increase your production?" well, it would take a long time to do that, would take a lot of capital, the shortages impact you too, and there's no guarantee that once COVID passes, demand won't go back down to 100 boards/day leaving you with a huge unnecessary capacity. A simple example, of course, but this kind of thing is happening in some form or another in most industries, and will just take some time to work itself out.

vineyardmike 5y ago
Great example! Easy to understand, and clearly away from any "conspiratorial" answer. Just to tack onto it... > Once you get started again, you crank up capacity to 110/day - it takes you 900 days - almost 2.5 years - to recover that original shutdown deficit, without accounting for any of the increased demand for your product. This is best-case scenario. Likely is that a few % of your workforce will have been out sick with covid (or even passed away), and a few % of your workforce may have quit to care for family, or quit for better pay elsewhere, etc. So your "work extra hard to hit 110/day" is more likely "work extra hard to stay at 100% or even 90%". Especially limiting if you need to buy parts for your output that may be delayed due to others who are behind.
- noodle 5y ago
  For sure - my example is just a very basic one to show how easily most industries can slide into a hole that takes time to dig out of even under good conditions. The reality is even more complex.

gabriel_fishman 5y ago

In 2020 I was working for a consumer electronics company and went to some presentations on how our supply chain and operations teams were dealing with the pandemic. I'm far from an expert on this, but this is what I heard from people who were working on this. First, you had a massive lockdown in China in January 2020, which shut factories temporarily. Then when those factories came back online, the production lines had to be reconfigured so that stations were 2 meters apart. At the same time, a lot of the collaboration that typically happens by people from a company flying out to China to meet with the supplier face-to-face were shifting to video, which frequently met that at least one side of the call was early in the morning or late at night. And as all of that was happening, there were also large shifts in demand as some products saw spikes in orders. That pattern then repeated itself across the world - a company might move production from China to, say, Indonesia, only to see the new factory have to temporarily shut down. I can imagine that two years of this would create major backlogs and disruptions.

chasd00 5y ago

imagine a quickly moving but congested highway. anyone even tapping the breaks will cause a massive slowdown. I think the chip supply chain is similar.

HWR_14 5y ago

> what's the impact? Not this much surely. A few months ago there were seventy billion dollars of goods anchored off of LAs docks alone. Some of those were finished goods, but some are intermediate goods. It's so bad that it's cheaper to make new shipping containers in China than spend the time to return them once they've been used once. We have a glut of practically new containers clogging up our infrastructure. Even as COVID stopped causing the direct backups, backups propagate all on their own. Like a giant traffic jam and you get to the front and the accident was cleared hours ago.