Which Microchips Are Delaying Deliveries

[GreggT]

As long as it doesn't affect the bottom line!

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[Mike50]

Certainly they are. They have tens of millions of dollars tied up in those sitting vehicles. But they are probably a little more interested in maximizing their dollars received, and maximizing the number of trucks built and maintaining their sales lead than in being “fair” to sales already “in the bag”.

 

[cghall77]

Exactly right... it IS more profitable to keep the production line running.

As an enterprise, FoMoCo is charged with making a profit, not making vehicles. Making a vehicles is a means to an end. And the execs are working for the board of directors, NOT you and I who are buying the product. We are clearly second in line.

Don’t shoot the messenger... I don’t like it anymore than you do. It is simply the corporate culture as it has evolved to at this point in time... any message to the contrary is spin.

Now, I realize that people will point out that if a company abuses their client base too much the whole thing loses value as sales diminish, but we are not at that point yet... we still keep on buying F150’s and they see that. Plus, the competition is in the same boat, inventories of Ram are just as meagre.

On the other hand, wouldn’t it be great for Ford just to issue a periodic press release stating “we have received XXX thousand partsahead of the planned restart of KCTP”? It would do a world of good from a PR perspective, and I bet it would bump the stock price up a bit too ?. Jim Farley are you listening?

my rant is done and I feel better.

For a company that typically runs there supply chain as an JIT model, the current inventory turns should get the attention of the board and the share holders. What was the latest reported, something like 28,000 trucks sitting "in production" waiting on parts? Having on hand inventory goes totally against their model and I would like to believe they would like to ship those trucks asap to cash in and get back to bau.

 

[Roady]

For a company that typically runs there supply chain as an JIT model, the current inventory turns should get the attention of the board and the share holders. What was the latest reported, something like 28,000 trucks sitting "in production" waiting on parts? Having on hand inventory goes totally against their model and I would like to believe they would like to ship those trucks asap to cash in and get back to bau.

I think a lot of companies will be re-thinking their JIT model. I'm not sure about Canada, but here in the US, we are experiencing all kinds of shortages. Chlorine for pools, appliances and furniture are just some of the major ones.

 

[cghall77]

I think a lot of companies will be re-thinking their JIT model. I'm not sure about Canada, but here in the US, we are experiencing all kinds of shortages. Chlorine for pools, appliances and furniture are just some of the major ones.

Agreed, I think many will be looking to go old school and implement warehouse management for their parts. This may or may not work out. Increased footprint to store components, warehouses filled with parts that go EOL then scrapped, recall on parts in their possession, tying up $ with on hand inventory. The way ford has handled this, I'd say their supply chain teams are not very strong. ?

 

[GreggT]

Agreed, I think many will be looking to go old school and implement warehouse management for their parts. This may or may not work out. Increased footprint to store components, warehouses filled with parts that go EOL then scrapped, recall on parts in their possession, tying up $ with on hand inventory. The way ford has handled this, I'd say their supply chain teams are not very strong. ?

Same with their Customer Service/Experience, pretty weak at best!

 

[85Mustangman]

For a company that typically runs there supply chain as an JIT model, the current inventory turns should get the attention of the board and the share holders. What was the latest reported, something like 28,000 trucks sitting "in production" waiting on parts? Having on hand inventory goes totally against their model and I would like to believe they would like to ship those trucks asap to cash in and get back to bau.

Normally yes, the sunk capital of thousands of partially built trucks would be a huge worry for the shareholders and board, BUT these are not normal times.

My guess is that the board was also briefed on what it’s going to take to fulfill those deliveries (part build units) vs what it’s going generate in profit by running the line flat out with the backlog of orders and pumping out dealer stock at better MSRP. This is a huge game of kicking the can down the road on the chip less trucks in Rmp 59 etc. but i think the difficulties which will be faced on completing these units are beginining to sink in.

I can’t see an elegant way out of this mess. Take guys off the line to fit the parts? This would be very inefficient labour wise even if the UAW would agree. Plus, then they are not available to work the line.

How about contracting out the work? Perhaps, but Ford has laid off a huge chunk of it workforce for the last 6 weeks. How do you think the average UAW member viewing that? Not well i think.

Then there’s the cost of installing a widget module... on the line @ $XX man/hour. Now think of the cost of doing that out in a field or shuffling trucks all over the place then installing in some warehouse... ka-ching! Cost per unit skyrockets so discounted units we all purchased competitively in Feb are going to continue to decline profitability-wise.

I totally agree with you about revisions to JIT manufacturing. I would not be surprised if the big 3 (big 7??) push the responsibility of warehousing down onto the tier 1 suppliers. Home Depot has a similar model where outages on the “shelves” are penalized monetarily on the supplier. Eventually after a few strikes, another supplier is awarded the supply contract. Look for this to happen in manufacturing.

 

[GreggT]

I totally agree with you about revisions to JIT manufacturing. I would not be surprised if the big 3 (big 7??) push the responsibility of warehousing down onto the tier 1 suppliers. Home Depot has a similar model where outages on the “shelves” are penalized monetarily on the supplier. Eventually after a few strikes, another supplier is awarded the supply contract. Look for this to happen in manufacturing.

Considering the very few manufacturers of chips and the uniqueness of each, I doubt Ford, GM, or whomever has the power to force anything on these manufacturers,

 

[cghall77]

Normally yes, the sunk capital of thousands of partially built trucks would be a huge worry for the shareholders and board, BUT these are not normal times.

My guess is that the board was also briefed on what it’s going to take to fulfill those deliveries (part build units) vs what it’s going generate in profit by running the line flat out with the backlog of orders and pumping out dealer stock at better MSRP. This is a huge game of kicking the can down the road on the chip less trucks in Rmp 59 etc. but i think the difficulties which will be faced on completing these units are beginining to sink in.

I can’t see an elegant way out of this mess. Take guys off the line to fit the parts? This would be very inefficient labour wise even if the UAW would agree. Plus, then they are not available to work the line.

How about contracting out the work? Perhaps, but Ford has laid off a huge chunk of it workforce for the last 6 weeks. How do you think the average UAW member viewing that? Not well i think.

Then there’s the cost of installing a widget module... on the line @ $XX man/hour. Now think of the cost of doing that out in a field or shuffling trucks all over the place then installing in some warehouse... ka-ching! Cost per unit skyrockets so discounted units we all purchased competitively in Feb are going to continue to decline profitability-wise.

I totally agree with you about revisions to JIT manufacturing. I would not be surprised if the big 3 (big 7??) push the responsibility of warehousing down onto the tier 1 suppliers. Home Depot has a similar model where outages on the “shelves” are penalized monetarily on the supplier. Eventually after a few strikes, another supplier is awarded the supply contract. Look for this to happen in manufacturing.

The labour concern should be a simple fix, figure out how much you are willing to pay, give the recent layoffs the first opportunity, if you still have open positions, offer up to uaw retirees, maybe post some summer student positions. Definitely have to be cost conscious adding that 1 to 4 missing parts.

I've worked for a company that did the electronics for Cummins. Having a hub for them to pull inventory from was very common, we would build then ship to a warehouse close to their assembly plant where we had to maintain a minimum number of widgets. Definitely can be done, but at what cost and we all know that cost is passed down to the consumer.

 

[mclroy]

Exactly right... it IS more profitable to keep the production line running.

As an enterprise, FoMoCo is charged with making a profit, not making vehicles. Making a vehicles is a means to an end. And the execs are working for the board of directors, NOT you and I who are buying the product. We are clearly second in line.

Don’t shoot the messenger... I don’t like it anymore than you do. It is simply the corporate culture as it has evolved to at this point in time... any message to the contrary is spin.

Now, I realize that people will point out that if a company abuses their client base too much the whole thing loses value as sales diminish, but we are not at that point yet... we still keep on buying F150’s and they see that. Plus, the competition is in the same boat, inventories of Ram are just as meagre.

On the other hand, wouldn’t it be great for Ford just to issue a periodic press release stating “we have received XXX thousand partsahead of the planned restart of KCTP”? It would do a world of good from a PR perspective, and I bet it would bump the stock price up a bit too ?. Jim Farley are you listening?

my rant is done and I feel better.

Excellent post. I would like to speak english more to keep discuss with the board here. I'm waiting too, since 03/15. I see the status of my truck in order processing with no other date. It's a Lariat with a V8. It is made in KC. So i think that she has a lot of chip in. Long time to wait.

 

[85Mustangman]

Excellent post. I would like to speak english more to keep discuss with the board here. I'm waiting too, since 03/15. I see the status of my truck in order processing with no other date. It's a Lariat with a V8. It is made in KC. So i think that she has a lot of chip in. Long time to wait.

Don’t worry mon ami, your English is fine... I understand exactly how you are feeling. I am waiting since 03/31 and also KC.
If you don’t feel comfortable posting publically, send me a DM.

 

[JayceeP]

This is the first I’m hearing of KC builds not shipping before the shutdowns. I thought that was a Dearborn issue. Damn…

 

[Mike50]

Just think how many thousands of people are waiting and wondering. Exactly why Ford needs to communicate with us. Even regularly.

 

[Redskins5]

The labour concern should be a simple fix, figure out how much you are willing to pay, give the recent layoffs the first opportunity, if you still have open positions, offer up to uaw retirees, maybe post some summer student positions. Definitely have to be cost conscious adding that 1 to 4 missing parts.

I've worked for a company that did the electronics for Cummins. Having a hub for them to pull inventory from was very common, we would build then ship to a warehouse close to their assembly plant where we had to maintain a minimum number of widgets. Definitely can be done, but at what cost and we all know that cost is passed down to the consumer.

Union employees aren't going to want to do the chips, As long as the plant is furloughed they are still getting 75% of their pay and if they are current union members and paid up on their dues then the union will pay the missing 25%.

 

[Redskins5]

Considering the very few manufacturers of chips and the uniqueness of each, I doubt Ford, GM, or whomever has the power to force anything on these manufacturers,

I'm sure that the manufacturers of the chips are making sure the car manufacturers in their countries are taken care of first.

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