Nothing will change because if we all fail together then we will be bailed out together by the government. So the best solution is to minimize costs today by maximizing the chance that we will all fail together as an industry in a downturn and get bailed out.
Is It Time to Rethink Globalized Supply Chains?
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Re: Is It Time to Rethink Globalized Supply Chains?
#12It seems to me like the problem is just that supply chains aren’t legible. I forget where I read this from, but Walmart or Amazon would easily pay billions of dollars to know which shipments won’t arrive over the next few months because of the rolling wave of factory shutdowns. Once you have that legibility, the extra step of snipping the globalized supply chains seems unnecessary. Some businesses will plan to mainta…
About a year after 9/11 I worked at the headquarters for one of our largest retailers. The main hallway through the complex that everyone had to pass through was decorated in flags and other patriotic displays wall to wall, floor to ceiling. But we also received constant emails from the company telling us to contact our members of Congress to prevent customs from knowing where we get our goods such as ceiling fans. The worry was that a spy in customs might give that information to our competitors. Seemed weird to have so many visible displays of "Country First" while at the same time placing paranoia about corporate spies in the government above the legitimate need for customs to know where the goods we were receiving were coming from.
Re: Is It Time to Rethink Globalized Supply Chains?
#13As often, I have a feeling that the answer depends on the person/group you're optimizing for.
As the government will swoop in and save the companies that are large enough, there is little risk for them, so why would they spend enormous amounts on mitigating that risk?
Re: Is It Time to Rethink Globalized Supply Chains?
#14It seems to me like the problem is just that supply chains aren’t legible. I forget where I read this from, but Walmart or Amazon would easily pay billions of dollars to know which shipments won’t arrive over the next few months because of the rolling wave of factory shutdowns. Once you have that legibility, the extra step of snipping the globalized supply chains seems unnecessary. Some businesses will plan to mainta…
Amazon has a program for this called Transparency. It has some other purposes but this is one of the features of it. It's not a perfect way to track the chain but it is vaguely like what you propose.
Re: Is It Time to Rethink Globalized Supply Chains?
#15The problem is that almost no one buys products based on the stability of the supply chain, so irresponsibly-global supply chains will beat out responsibly-global ones on price.
The problem is our tools to addressing this are either (a) some sort of tariff arrangement, which will almost certainly be political footballs far more than they will address any real problem, or (b) some regulatory/compliance arrangement, where regulated industries will have to sift through billions of dollars of compliance paperwork annually describing their supply chains, and which may be subject to the scare-of-the-month and international political football. Neither is ideal.
Re: Is It Time to Rethink Globalized Supply Chains?
#16Counterpoint: YKK (look at your zipper) relies on absolutely no one else for its supply chain [0]. This could easily be seen as a waste by those who would say YKK should just source its metal from the foundry down the street. It's easy to do a quick thought experiment in your head to think about how feasible it might be for every company to vertically integrate the way YKK has. On the other hand, YKK can't get jerked around by greedy corporations looking to take advantage of their dependencies.
[0] https://ykknorthamerica.com/the-ykk-difference/vertical-inte...
Re: Is It Time to Rethink Globalized Supply Chains?
#17It seems to me like the problem is just that supply chains aren’t legible. I forget where I read this from, but Walmart or Amazon would easily pay billions of dollars to know which shipments won’t arrive over the next few months because of the rolling wave of factory shutdowns. Once you have that legibility, the extra step of snipping the globalized supply chains seems unnecessary. Some businesses will plan to mainta…
Amazon has a program for this called Transparency. It has some other purposes but this is one of the features of it. It's not a perfect way to track the chain but it is vaguely like what you propose.
Can you elaborate? What are the other purposes?
Re: Is It Time to Rethink Globalized Supply Chains?
#18Nothing will change because if we all fail together then we will be bailed out together by the government. So the best solution is to minimize costs today by maximizing the chance that we will all fail together as an industry in a downturn and get bailed out.
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Re: Is It Time to Rethink Globalized Supply Chains?
#19The price advantages of globalised supply chains vs. the relative rarity of an event like this means that, during normal periods, firms using them will enjoy a significant advantage over those doing the "right" thing and market forces will weed out the latter. So I don't expect management to be taking a lead on this.
Re: Is It Time to Rethink Globalized Supply Chains?
#20The problem is that almost no one buys products based on the stability of the supply chain, so irresponsibly-global supply chains will beat out responsibly-global ones on price. The problem is our tools to addressing this are either (a) some sort of tariff arrangement, which will almost certainly be political footballs far more than they will address any real problem, or (b) some regulatory/compliance arrangement, wh…
Hm, what about some kind of "chaos monkey" where a random number generator decides which countries will be embargoed and for how long? (Half-joking.)