Back Orders & Shortages: The New Reality
The Realities and Their Ripple Effects:
- Back orders are rampant.
- Lead times are VERY long
- Sometimes there are no available substitutes
We are currently seeing products with ETAs as far out as May, 2022. And those will push further out as companies place orders for those products and allocations get eaten up long before they arrive. So today, it could be November, 2021, but if you don't order and get in line, in two weeks that ETA could be months later.
Why is this happening? Many reasons. And not all of them are related to the pandemic.
Chip manufacturing has been running on the edge of full capacity for at least a year BEFORE the pandemic.
Companies that produce chips basically build to order. But with lead times approaching 18 weeks: 12 weeks to build a chip; 4 to 6 weeks to test and then package them. Once a run of chips for Company A is out of manufacturing, tooling is changed to run chips for Company B, and so on. When there is a surge in demand, lead times increase and there are back orders. But modern forecasting and just in time manufacturing worked OK for a long time. Until...
When Covid hit, many manufacturers halted or slowed production radically. Some had to because of Covid outbreaks. Some because their products weren't selling. MANY cancelled orders for parts (chips and such). Then came the surge in demand a few months ago. Chip manufacturers were inundated with new orders. But they did not have capacity to build all of these products immediately. So orders were put in line to be produced as fast as possible. But that meant that many companies were waiting for 18 weeks, 24 weeks or many more for their orders.
Then there were the fires.
A chip plant in Japan (AKM Audio) burned (for 3 days) in October of 2020. And they made most of the DAC and ADC chips used in pro-audio and high end consumer audio products. Which means that anything that has a digital component in it, is probably on back order.
Shipping and trucking and customs. Oh my.
There is also the logistics side. Shipping is a mess! Containers are difficult to come by, ports are backed up, meaning ships are waiting a long time to dock and get emptied, slowing their return to get more product. Customs is backed up. There are many instances of products getting off of the ship only to sit weeks to get processed by Customs.
All of this means that it is getting very difficult to get products. Just when things are getting moving again.
What can Audio Supply do?
With access to so many suppliers, we can work for you to find products that can be substituted for those hard to get items. Or help you redesign to get a functional system whenever possible. There will be times that there just isn't a substitute available - like digital mixers. Those are virtually impossible to come by.
But if there are any to be found, we WILL find them. Just give us a call.