Dell's build-to-order business model makes it the most vulnerable to the drive shortages that are wreaking havoc across the industry, channel analyst Context reckons. The chaos resulting from the killer flooding in Thailand has sent the disk drive supply chain into turmoil, making PC shortages inevitable. So far Asus, as well …

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Wednesday 9th November 2011 11:49 GMT Anonymous Coward

Always keep something in your inventory.

My dad used to keep inventory for 3 - 6 months of production, in a non-IT related business line. Lots of people told him it was madness and such.

Disaster struck the local economy, specially the supply chain. The competition went nearly bankrupt, and we became the sole supplier of our product in 3 cities.

Hard drives don't depreciate in 3 months. Yes, you may think you are losing money (all that money stuck in the warehouse), but it is actually insurance.

And, for our main product, the raw material was perishable. You know, raw leather?. Hard drives have no perishable parts, afaik. Having some extra storage is essential, specially when your single supplier has only one facility for production.

You don't need to have 3 months in stock, but some amount that averts or mitigates disaster is wise.

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Wednesday 9th November 2011 13:51 GMT b166er

While there might be a high level of depreciation on chipsets and processors, I wouldn't expect any stock of hard drives to depreciate within say a six month period.

It's true, however, that Dell probably didn't contemplate that.

This makes me laugh somewhat. We are all familiar with drive redundancy, but have been toppled by a lack of plant redundancy, how ironic.

Perhaps the ODM's should just buy SSD's in massive amounts and drive the price down while we have this opportunity.

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Wednesday 9th November 2011 13:51 GMT Z-Eden

And the lesson to take from this? Don't build on a fecking flood plain. Beancounters getting greedy again.

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Wednesday 9th November 2011 13:51 GMT Anonymous Coward

"Rival US firm HP isn't do much to clarify the outlook either."

IMHO this should read:

"Rival US firm HP isn't doing much to clarify the outlook either."

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Wednesday 9th November 2011 13:51 GMT John Arthur

Doubled drive prices?

A month ago I bought a 750GB Seagate drive to build a new computer for my sister. £37.85 from Ebuyer. Yesterday it was £130 from the same source.

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Wednesday 9th November 2011 13:52 GMT RussellMcIver

100% increase?

Try more like 500%.

A 1TB Samsung HDD was going for ~£40 a month ago but since the flooding I have seen the same product listed at prices in excess of £200.

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Wednesday 9th November 2011 14:33 GMT Mark Dowling

On the other hand

Maybe SSDs on the Latitude E series won't be inordinately expensive now? Fat chance I suppose...

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Wednesday 9th November 2011 15:13 GMT Anonymous Coward

Matter of scale

When you are building 40K-50K units of PC per day then keeping even a weeks extra stock of a component means you need space. Multiple that out..

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Wednesday 9th November 2011 16:59 GMT b166er

If it were possible to stack a standard europallet to 1 metre high with standard 3.5" hard drives, without any wastage for packaging/reinforcing, you would need 110 pallets to cover a week's stock at the numbers suggested by AC@15:13.

Let's say 200 pallets so they can be stacked safely.

Let's estimate £40pw per pallet for secure storage (much cheaper if it was in-house), that totals £8000pw or a smidge over a tuppence a drive pw. That would be 52p per drive over 6 months.

It would have to be some serious depreciation to make that a problem.

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1. Wednesday 9th November 2011 19:56 GMT Tom 13
  
  That's a more short-sighted calculation than a CEO worried about next quarter's earnings numbers.
  
  If you've got six months of storage, than means more labor. Somebody has to move them into storage, keep track of the storage rotation, and move them to production as needed. JIT eliminates all that. You also have new QC requirements. If it is going directly into production you QC it as you use it and send it back within the RMA timeframe with limited risk. If you are storing for 6 months, you need to QC it when it comes in, but it can still fail while in storage but before production. In the States the last factor is that it IS inventory and businesses get taxed on it. Twice a year you have to count it all, put a value to it, and send the government their cut, and that's over and above the rest of the taxes. I presume the same thing happens in the UK and EU, but don't know for sure.
  
  Yeah, the guy who keeps inventory can probably ride this one out. But for the 3 months the shortage will last, does he make enough money to more than recoup the losses he's taken for keeping the inventory for the last 10 years? The issue isn't the inventory, it's the effectively sole source for the drives. Which I think another Reg author was a bit more pointed about back when the flooding started.
  
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Thursday 10th November 2011 09:27 GMT Old Timer

Storage

b166er - yes well done except you appear to have a crystal ball that knows what specific component is going to go short. Multiply it out by all the components in a PC.

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