A customer this morning wrote:
I have put my email on the notification list several times for the Atom Amp to try and purchase one, each time I follow the site daily close to the in stock date and each time I find it to be sold out and never receive an email for a chance to purchase one. This is becoming very discouraging
We owe another update. This post will be an inside look at business…
JDS Labs observed a temporarily traffic and sales slowdown of more than 50% in mid-March at the onset of COVID-19 in the United States. Nick and I pulled the team together to express our concern for safety, mandating self-quarantines.
Then a strange thing happened. As state governments initiated quarantines, traffic more than rebounded from the low point. We had positioned JDS Labs for a slowdown, and instead, our limited team experienced a record number of orders in April and May. Thank you!
Alas, we were unprepared for doubled sales volume and have been adjusting on the fly.
With doubled demand for Element II, it was impossible for our old processes to keep up. We’ve expanded production to multiple machines. Some color variations for Element II have been temporarily removed while we re-balance the increased manufacturing workload. Our machine shop productivity is up 50%, and will be at 200% by the end of June.
We manage inventory through a custom ERP system, which allows us to schedule production runs for just-in-time delivery. This method has worked well for years.
Just-in-time inventory falls apart during a pandemic. Lead times for oscillators, transformers, cables, and ICs doubled or tripled in Q1 2020. No problem, we thought. We proactively adjusted order schedules based on increased lead times.
Then another variable hit us. Doubled sales combined with doubled and tripled material lead times could not be predicted.
- Element II and EL Amp II – We got lucky. All materials have been secured to maintain stock.
- 16V and 15V Transformers – Air freight costs temporarily rose by 2-3x the usual rate (now resolving). While transformers are “free” with all JDS Labs amplifiers and DACs, material freight is a serious expense. We absorbed these costs to keep retail prices consistent to you.
- Atom DAC – Yes, it’s done and in reviewers’ hands. With 25% staff filling doubled order volume the past two months, we were in no position to push demand even higher with a new product announcement.
Amp Amp Shortages
Atom Amp is a high volume product, with over 11k amplifiers in the market. Printed circuit boards are assembled by our US contract manufacturer in large runs, with smaller batches released to JDS Labs regularly. This type of inventory should have been resilient, giving us months to adjust production schedules. We managed to keep up until early May, when it became clear that a years’ worth of all new, hand-matched volume potentiometers, VR1, were 4+ weeks behind schedule. We had padded the schedule by 4 weeks.
Under normal circumstances, we would have set Atom Amp to Backorder status so that you could still checkout. All hands jump into the shipping department to fill Backorders upon availability. But with a quarter of our staff and uncertain material availability? We were unwilling to make such a commitment. We had two choices: Raise Atom Amp’s price to control demand, or restrict stock to match availability. Neither is a fun choice. We resorted to listing Atom Amp as Out of Stock, meaning no checkout, until shortages were resolved.
About 14% of the new volume pots arrived last week. Our CM shipped a batch of assembled Atom Amp PCBs within 24 hours. Then more challenges ensued.
The May 29 batch was sized to ordinarily last for 3 days, but sold out in 40 minutes! Our CM shipped a batch 10x larger, which was listed In Stock on June 2. Once again, Atom Amps sold out in only 4 hours (even faster). We are still awaiting the remaining 86% of VR1s, meaning stock is increasingly limited.
Because there are far more requests for Atom Amp than available boards at this time, we are sending out Stock Notification emails in the order received. If you signed up for a notification and have not received an email, this is not a mistake. Please know we are working feverishly to restore Atom Amp stock, while accepting only orders we are confident we can fill.
All of this being said, VR1 availability has been a pain point in Atom Amp production since release. This challenge will be eliminated in a matter of weeks through supply chain diversification. Two suppliers are better than one, and the competition is pushing specifications higher.
More Atom Amps will be listed In Stock tomorrow, June 5 @ 9am CT.
We are grateful to see high demand during these challenging times. Some businesses have struggled with revenues, while we have struggled only with labor availability, freight costs, and supply chain disruptions. No complaints.
It’s unprecedented to halt sales, intentionally delay product releases, and keep the majority of our workforce at home. We’ve made these choices to keep our team and customers safe. And in the long-run, we will be a stronger company from lessons learned.
Strange times indeed.