It’s a Horrible Time for ‘Just in Time’ Business Models

Earlier today we published a new episode of the “Odd Lots” podcast with Brian Venturo, the chief technology officer of the cloud services company CoreWeave. It’s all about how intense the competition for semiconductors has become. Between booming cloud data centers, gamers, cryptocurrency miners and everyone else, chips are becoming harder and harder to come by. 

We’ll publish the whole transcript tomorrow. But in the meantime, I wanted to spotlight a particularly interesting part of the transcript, which really speaks to how much things have changed in the last several months. 

Joe:
What does the typical market look like?

Brian:
Well, you know, like sitting here today, I would die to go back to like six months ago. The typical market is a place where you can, where things are in stock and you may have trouble finding them, but it may take you a couple hours and you can find the stock that you need and have it delivered the next day.

Wow. It's not really like that right now … half my job here is really scouring the internet to try to find people that may have stuff. Like if I'm looking for a certain item, whether it's a CPU, whether it's RAM, whether it's, uh, a special motherboard that we're looking for, you know, I go through kind of our regular partner channels first, which is some of the largest distributors. And then typically right now I get told there's no chance to get that within 16 weeks. And then I go to eBay. And I don't go to eBay to buy the stuff. I go to eBay to say, okay, is there a supply out there? How do I source it? Because it's really hard to kind of connect buyers and sellers in this market because there's so many people that provide services.

So it's really like, OK, like get a feel for what's out there and then go hunt it down. So it's, it's pretty wild. Like last year it would be no problem for me to go out and get 10 terabytes of RAM. Right. And like 64 gig DIMM Ram and build up 10 terabytes and get it overnighted to me if we needed it for a build. And there was a time late last year where we actually had somebody get on an airplane from California to Chicago because we needed something done in like three hours. That's just not possible today.

Joe:
Wait, did that person have a chip in, or some sort of chip set in there, that they just traveled for? They just got on the plane and brought it to you?

Brian:
Yeah, we needed that. We had to deliver something for a client. There was late on a Friday night and we needed, I think it may have been like 20 terabytes of RAM. And we found a supplier in California that was still open that had it in stock and we paid them extra to put them on a plane. So a lot of what we do is very much just in time. Right. So we've done dumb stuff like that before, but if I needed to do that today, like I don't even think I could source the RAM.

The story about just-in-time business models getting bedeviled by supply chain issues is incredibly common these days. And everything’s intersecting with everything. For example, here are two headlines that crossed the terminal today which were perfect:

*SANDERSON: HIGH LUMBER PRICES ARE HITTING CHICKEN-FARM PROFITS

*SANDERSON: LUMBER PRICES MAKE PLANT CONSTRUCTION CHALLENGING

Anyway, what’s interesting is how computation is not a safe haven from supply chain woes and the challenges of a “just-in-time” model. Last year you could ask someone to get on a plane and bring you RAM. Now you can’t. And now Brian, like people in all different kinds of industries, is being forced to order supplies weeks or months in advance, and much more than he otherwise would have because of the difficulties of actually sourcing supply.

Check out the full episode here.

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