Factory on Fire March 2011 N Japan

1. 60% of the world's silicon wafers  - the raw materials for making chips - are produced in Japan.  90% of the BT resin used to make chips came from Japan.  It could take  6 months or longer before production and the supply chain recover. Prices for flash memory have increased up to 20% already this week. Touchscreens are in very short supply. 

2. Many Toshiba, Panasonic, and Sony plants have been damaged - Sony alone has closed 7 factories. The Texas Instruments plant in Miho (which generates 10% of TI's global revenue) will be closed til June. TI is attempting to transfer production elsewhere.

3. With electricity shortages and massive damage to infrastructure (water, roads, utility transmission lines, refineries, ports) post-quake, getting these facilities back on-line and in production will be a daunting task. Getting raw materials to and finished product out of them will present additional challenges.

4. Japan has been a strong adopter of "just-in-time" manufacturing - meaning their whole supply chain is tightly linked.  Experts say there's about 2 weeks of excess stock available now to world markets - when those are exhausted, the lack of a single chip, LED, disk drive, ASIC, or cable could cause an entire product (server, PBX, voicemail, LAN switch, camera, etc.) to be delayed.

SynerTel observed a mini-version of this in Q4/09 and Q1/10.  Dell ran out of server chassis (metal frames) and disk drive cables - causing a 2 week normal order fufillment cycle to drag out for several customers to over 9 weeks. For clients whose servers were failing or under-powered - this was a very long and difficult wait.

What are the lessons we should draw here?

1. If you think your business is going to need something in the next 4 months - new phone system, server, workstations, laptops, video conferencing, LAN switch, UPS, etc - NOW is the time to get with us and get it ordered.

2. Prices are likely to shoot up as supply constrains the market.  We've seen this with raw copper prices for years affecting the price of cables and assemblies -- and we all see gas prices fluctuate weekly.  Its likely going to be more costly to acquire the same piece of hardware next week than it is today.

How will SynerTel help? 

1. We'll do our best to respond rapidly to requests for contracts, quotes, and leases.

2. We'll leverage our long term supplier relationships and buying power to minimize "can't get it at any price" and price change impacts for our customers

3.  We'll store as much "bought it but can't quite install it yet because we haven't moved yet"  in our warehouses as possible for clients.

4. We'll suggest alternatives when possible if originally specified equipment isn't available.

Note - telcos are going to experience the same equipment constraints. The normal 35-45 day time to install a new integrated (voice/data/fax) circuit may drag out if the telcos can't get  herouters they need to install your circuit.  Allowing us to order circuits now - even if your move isn't for months - will help ensure the parts needed to fulfill your move-in order are available.  Don't worry - you won't pay for the circuit til its actually in use.

Its not going to be fun for the next 4-6 months meeting deadlines.  You can do your part to ensure your business technology project isn't compromised by letting us get it started now - before prices soar and delivery horizons stretch out months and months.