Unexpected Demand versus Unable to Supply

I’m getting more and more troubled about the language in notices that the camera companies are using to describe why a product is not in stock. 

In particular, I keep seeing words on the order of “unexpected demand” or “demand beyond our expectations.” 

Really? Your high-paid marketing and PR team is telling the world that they can’t judge how well a product will sell? That you’re so far out of touch with your customer base that you can’t reasonably judge what demand might be? In other words, you might as well be saying “we made this but we didn’t know if it would sell.” I’m sure the shareholders would be interested in the fact that you’re simply speculating with products and hoping that you’re right.

It’s not like this is a new thing. I’ve witnessed this same “apology to customers” approach from the Japanese for five decades now, and I’m pretty sure it preceded my early technology press work. Because the words keep getting repeated with each new product release, these notices seem to be more a cultural thing in Japan than a true apology or explanation to customers.

What’s really happening behind the scenes is mostly “normal.” For obvious reasons, you don’t build the entire supply of a product before releasing it in the tech world. Most cameras have two-year to four-year product life spans, so if one sells 250k units over its lifetime, that’s a bit over 10k units a month. You’re not going to sit on 240k units of inventory at month one. No, you build out your product on some production curve given to you by sales and marketing. So maybe you have a first month target of 25k, second month of 20k, and so on. 

Here's what’s actually happening in Japan. Short version: no one gambled and then they got caught out by supply chain shortages they helped cause. 

The pandemic led most manufacturers to cut back on all production. My local camera store and auto dealer, for example, were completely closed for four months in early 2020, and partially open for another four months. Hard to sell product when the stores are closed (and in the case of cameras, no one could really go out and use them as they normally do, so why did we need them?). So the companies shut down (or slowed down) their factories. Unfortunately, there were technology products in high demand that were still being sold through the Internet, particularly things that enabled remote Zoom-type meetings (Web cams, laptops, screens, microphones, etc.). So parts suppliers shifted to catering to the companies that were calling in desperately trying to get parts for high-demand products. 

By the time the low-demand product producers who had slowed manufacturing discovered they needed to ramp production back up, and fast, getting the parts they needed was no longer simple. Because everyone had switched to some form of Just in Time parts deliveries for manufacturing, there wasn’t much inventory around to restart full manufacturing of existing products, let alone deliver new ones. 

I’m told by someone in a position to know in Japan that every camera company is basically “juggling priorities” right now; no one has the full incoming parts stream they require to produce all the products they want to produce, so they have to make constant decisions on where to allocate parts that are common among products, and even which part they want a supplier to produce when the supplier tells them that they can only produce a fixed, small quantity in the immediate future. “I can fit making you 10k chips into our fab schedule, which one would you like us to produce?”

I’ve commented already about the fact that the market analysts that follow the camera industry have no agreement at all about how many cameras will be shipped in 2021 when the books finally close. Even the camera companies disagree. It seems clear to me that 2021 will end up higher than 2020, but by how much? And what would the number have been if there were no parts shortages? At the moment it looks like we’re headed towards an ILC number in the high six millions. I’m pretty sure that it would have easily exceeded 7m with no supply constraints. 

Canon recently sent out a notice that seven RF lenses can’t be produced to current demand. They used the “more orders than expected” line again. No, they should have expected the number of orders they received if they had any reasonable connection to their customer base. 

The latest variation is that no sooner did Tamron introduce three new lenses (18-300mm f/3.5-6.3 XF mount, 28-75mm f/2.8 Di III G2 FE mount, and 35-150mm f/2-2.8 FE mount) their PR department issued the "have received reservations that significantly exceeded our expectations, and it is predicted that the number of production will not keep up with customer requests" notice. This is bragging at the same time as apologizing, which is some new form of psychological communication that really needs to be discouraged. If you don't have them to sell, they aren't sales ;~).

Apple seems to do things better (IMHO). The recent iPhone 13 introduction is just another example of how Apple handles initial demand: they don’t apologize for not being able to deliver to demand, they simply try to give you an idea of when an order you make today would actually arrive (and in my experience they’re really accurate at that). 

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I notice that Nikon has changed their wording recently. This week the EP-5A, EP-5B, MB-N11, and 70-300mm f/4.5-5.6E AF-P are the latest Nikon products to succumb to production problems (the AS-15, SC-29, and EH-5D, however, are back available to order). I suspect that the 70-300mm lens, in particular, is one of those parts juggling decisions, as it uses the same sort of stepper motor that the Z lenses do. The good news is that Nikon seems to have changed their wording to "we can't deliver these products for production reasons, so we'll temporarily stop taking orders for them." I'm not sure that's exactly what the customer wants them to do, but it's better than blaming the problem on unexpected customer demand. 

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