Why we're about to face widespread and random shortages (and what to do about it)
Shortages are on the rise, caused by supply-chain glitches, chip manufacturing slowdowns and labor problems.
Remember the early days of the pandemic, when toilet paper and rubbing alcohol were hard to find? I'm sorry to be the bearer of bad news, but that was nothing. We're now facing growing shortages of all kinds of products.Â
You may have already begun to notice. If not, you soon will.
To oversimplify the problem, our industrial, digital economy is built on a fast-moving phalanx of just-in-time supply chains. Technology was and is deployed to minimize inventories and maximize efficiency. The production and delivery of physical products has become increasingly complex and co-dependent.
As a simple example: Remember the early-pandemic flour shortage? People in quarantine started baking bread, creating a demand for flour in larger sacks. The sack industry was taken by surprise, and couldn't meet demand. And so flour became hard to get for awhile. It wasn't the flour, but the sacks. Weird, right?
Unfortunately, it’s going to get a lot weirder.
One big reason for shortages is the global microprocessor chip shortage. So many of our products have chips in them. All your household appliances, including even your toothbrush, are dependent upon the microprocessors inside.
For the past 20 years, we’ve made enormous progress in the quality, price and availability of consumer goods. We did that by using microprocessor-based technologies. In doing so, we made the world of consumer goods dependent on those microprocessors.
The chip shortage is hammering the car industry, especially. When the pandemic hit, car companies cancelled orders for chips, expecting slowdowns. So the chip-makers canceled orders for other electronic components and for raw materials, which sent a ripple all the way down the supply chain, in some cases causing layoffs and closures.Â
Nissan will make a half million fewer cars. GM has manufactured thousands of cars that are now being stored as they wait for the microprocessors that will complete them. The US car industry may make 5 million fewer cars this year. Tesla is rewriting its software to support alternative chips in Tesla cars. Chip shortages are estimated to cost the US car industry $210 billion, and you can be sure they'll be passing those costs on to car buyers, contributing to inflation.
What's less well known is that the car industry is aggressively hoarding chip supplies that were made for other industries, which exacerbates the shortages for other kinds of products.Â
The Apple Watch was delayed because of supply chain problems. Smartphones are being affected. Thousands of product types are affected by delays or stoppages because of microprocessors taken away by the car industry.
Random events also contributed. A massive chip factory in Japan was damaged by fire. A drought in Taiwan slowed production there (chip-making demands tons of water). And winter storms in Texas caused some US chip makers to halt production for a spell.Â
The biggest companies in the biggest industries have the heft and clout to demand preferential treatment, leaving startups and entrepreneurs without the components they need to bring new innovations to market.
The supply chain is also dependent upon people. The labor market is super weird right now because of the pandemic and pandemic-related reasons.
Companies are having trouble hiring people and getting them to come to work. Or they're forced by virus outbreaks to send people home. This applies to factory workers, dock workers, drivers and others. These labor issues are causing slowdowns, which are in turn causing bottlenecks in the supply chain.Â
Around 90 percent of the world’s electronics go through a single port in China called Yantian port. When Chinese authorities closed it because of the covid pandemic, the flow of electronic parts to the world nearly stopped, contributing to the chip shortage. After they reopened, the backlog was easily seen by the many ships waiting their turn to enter the port for weeks on end.
The Delta variant of covid has hit the lumber and paper industries hard because of forced shutdowns. That's causing paper shortages, which will have a ripple effect on items that use paper (such as products that come in paper bags or cardboard boxes).Â
In addition to shortages, consumers will see greatly reduced variety and higher prices.Â
And the worst part is: As consumers begin to notice shortages, they'll start to hoard goods, which will send the shortages into overdrive.Â
Still, there's a certain logic to hoarding. It's uncertain what will be available in a few months, and what will not.Â
It also makes sense to buy early. For example, I would recommend that you do all your holiday shopping by mid October.Â
It’s not the end of the world. We’ll survive, and everything will get better next year. But be aware that we're all going to see increasing non-availability of random consumer goods. This will be accompanied by higher prices and lower selection.
Plan accordingly, and good luck.Â
Mike’s List of Brilliantly Bad Ideas
1. How is flipping garages a video game?Â
A new video game called Garage Flipper has you spending hours upon end buying, restoring and selling stand-alone garages, even as your own garage remains filthy, dilapidated and unkempt because you're too busy playing video games. It's all the work and time of actual flipping, but without the money!
2. Finally, a wristwatch made out of garbage!
Vollebak (in partnership with the Wallpaper* Re-Made project) just introduced a trashy new accessory: A watch made out of garbage. Specifically, the watch is made entirely from discarded electronics parts — not just materials, parts! The watches are built with used motherboards, TV wiring and smartphone chips.
3. Carmaker wants to put the dashboard on the steering wheel!
Hyundai filed a patent for a steering wheel design that’s got a huge screen on it where dashboard components like RPMs and current speed are displayed. Is the screen upside down during turns? Do I need my reading glasses to see my speed? The carmaker also revealed its penchant for steering wheel screens in its Mint Concept car.
Mike’s List of Shameless Self Promotions
Here’s what I’ve been up to lately:
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How to build a winning cyber security resume
12 reasons why you should hire a hacker
Why we don't need laptops or phones anymore
CURRENT LOCATION:Â Silicon Valley, California