Random Thoughts - Part Deux [NO POLITICS]

[NoHaveMSG]

Originally Posted by daiheadjai

Random thought: what with all the supply chain disruptions due to the effects of the coronavirus on China in particular, does this validate the concept of diversification?

I mean, yes there's economies of scale to be had, and labour costs in China are cheaper than most (though not the cheapest), but putting all your eggs in one basket (particularly one as opaque and authoritarian as this one) seems like it was always a risk.

I'm sure profits might be a bit lower if you also had a supply chain based out of another low-cost country, but wouldn't the risk-mitigation for an event like this be worthwhile?

We have more then one vendor for all our components and stock enough to cover lead times for anything we use/sell on a regular basis. If a company only has one vendor they rely on for a component, that is just asking for trouble.

[Tcoat]

Originally Posted by NoHaveMSG

We have more then one vendor for all our components and stock enough to cover lead times for anything we use/sell on a regular basis. If a company only has one vendor they rely on for a component, that is just asking for trouble.

It is unfortunate that is some cases having multiple vendors is not possible. There is one foundry in North America capable of meeting our casting needs. ONE! The castings also have a time limit in how long we can hold onto raw stock before they either get too hard to meet machining specs or get rusty and are unusable so we can not hold more than a couple of days stock at a time. It does get awkward sometimes especially in winter where highways can be shut down for a couple of days.


Oh and our sub assembly plant is contracted to single vendors and have no choice in having others so...

[NoHaveMSG]

Originally Posted by Tcoat

It is unfortunate that is some cases having multiple vendors is not possible. There is one foundry in North America capable of meeting our casting needs. ONE! The castings also have a time limit in how long we can hold onto raw stock before they either get too hard to meet machining specs or get rusty and are unusable so we can not hold more than a couple of days stock at a time. It does get awkward sometimes especially in winter where highways can be shut down for a couple of days.


Oh and our sub assembly plant is contracted to single vendors and have no choice in having others so...

Yeah I can imagine that is an issue in certain industries. We are lucky to have a couple foundry's that can supply our spring steel. High frequency battery chargers are hit and miss though, as are DC motor controllers. We have multiple suppliers for both, but our secondary options suck.

[Ultramaroon]

Happy Friday, all!

[nextcar]

Originally Posted by Tcoat

It is unfortunate that is some cases having multiple vendors is not possible. There is one foundry in North America capable of meeting our casting needs. ONE! The castings also have a time limit in how long we can hold onto raw stock before they either get too hard to meet machining specs or get rusty and are unusable so we can not hold more than a couple of days stock at a time. It does get awkward sometimes especially in winter where highways can be shut down for a couple of days.


Oh and our sub assembly plant is contracted to single vendors and have no choice in having others so...

Or there can be hidden single sources that your multi-sourced vendors rely on...

The 2011 earthquake in Japan shut down a chemical plant that produced over 80% of the world's supply of a specific resin used in chip manufacturing... impacting the entire semiconductor sector!

[Tcoat]

Originally Posted by nextcar

Or there can be hidden single sources that your multi-sourced vendors rely on...

The 2011 earthquake in Japan shut down a chemical plant that produced over 80% of the world's supply of a specific resin used in chip manufacturing... impacting the entire semiconductor sector!

Yep! Each level can have a single source supplier involved right down to the raw materials.
The story of how the US had to get the CIA to buy all the titanium to build the Blackbird spy plane from the Soviet Union so that they could spy on... the Soviet Union is a fun example.

[ScoobsMcGee]

Originally Posted by Tcoat

I just sat through a two hour corporate teleconference on this. If it was JUST China impacted then your point would be valid but we have plants in pretty much every industrial country in the world and the impact is slowly spreading across all of them. The Asian plants are of course the highest impacted at this point but the European plants (especially Italy) are starting to feel the impact as well. The risk mitigation of spreading production around would be far outweighed by the increased costs. As we are seeing not all that effective in a global scale situation anyway.
So far may plants are not effected by direct parts shortages but indirect materials such as gloves, safety glasses, drill inserts and a dozen other things made in China are starting to get hard to come by. These are products that are essential to operate but really only made in areas that are susceptible to this sort of incident.

This plus Sweden, and we're starting to investigate customer service contingencies for the US. While the company I work for does have the option of software phones, most of the rank and file office workers have desktops that they can't reasonably take home.

Also I've been worn out on the "Oh, he has coronavirus!" jokes every time someone coughs or sneezes for the past two weeks.

[IceFyre13th]

Originally Posted by Tcoat

[ame]https://www.youtube.com/watch?v=xweiQukBM_k[/ame]

[Tcoat]

Originally Posted by ScoobsMcGee

This plus Sweden, and we're starting to investigate customer service contingencies for the US. While the company I work for does have the option of software phones, most of the rank and file office workers have desktops that they can't reasonably take home.

Also I've been worn out on the "Oh, he has coronavirus!" jokes every time someone coughs or sneezes for the past two weeks.

The jokes are all old.
My biggest issue is fighting the myths and misinformation that some dumbasses are spreading.
Videos of "victims" dropping dead in the streets.
Random sentences (and even individual words)taken from throughout fiction books and strung together to "prove" the virus is manufactured.
There is a 90% fatality rate that is being hidden.
Oh so much crap!

[p1l0t]

Originally Posted by Tcoat

The jokes are all old.
My biggest issue is fighting the myths and misinformation that some dumbasses are spreading.
Videos of "victims" dropping dead in the streets.
Random sentences (and even individual words)taken from throughout fiction books and strung together to "prove" the virus is manufactured.
There is a 90% fatality rate that is being hidden.
Oh so much crap!

Hahaha I guy at the bowling alley was complaining about his watery eye. I was like, that's the first sign of COVID-19... He got scared for a second LOL.

Sent from my SM-G975U using Tapatalk

[Spuds]

Originally Posted by p1l0t

Hahaha I guy at the bowling alley was complaining about his watery eye. I was like, that's the first sign of COVID-19... He got scared for a second LOL.

Sent from my SM-G975U using Tapatalk

You're terrible!
...
But also really funny.

[Ultramaroon]

Originally Posted by Tcoat

The jokes are all old.
My biggest issue is fighting the myths and misinformation that some dumbasses are spreading.
Videos of "victims" dropping dead in the streets.
Random sentences (and even individual words)taken from throughout fiction books and strung together to "prove" the virus is manufactured.
There is a 90% fatality rate that is being hidden.
Oh so much crap!

Wait. That's not true?

[Tcoat]

Originally Posted by Ultramaroon

Wait. That's not true?

Well all true if your news source is Facebook

[serialk11r]

Originally Posted by daiheadjai

Random thought: what with all the supply chain disruptions due to the effects of the coronavirus on China in particular, does this validate the concept of diversification?

It validates the concept of redundancy and state subsidies to that end for critical goods, IMO.

Diversification doesn't do much when everything is connected. People think bonds are a diversification from stocks...except they both go up in response to monetary stimulus, and they both crash in a credit crisis. The two move in the same direction when things are REALLY bad, which is when you really need that diversification. (more accurately speaking, rate sensitivity aka long term debt has that problem) People think some stocks are safer than others, but again they all crash together and go up together on many days.

Same with diversifying suppliers. Isolates you from some risks, but chances are those suppliers are sharing some risk factors.

If you have an independent vertically integrated copy, then that is true isolation from outside events, but knock-on effects could still take your own business out since the economy is all connected at some level. Even North Korea imports oil.

The trade war results follow the same logic.