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Is It Time to Rethink Globalized Supply Chains?

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Re: Is It Time to Rethink Globalized Supply Chains?

#31

Post by AnthonyMouse »

fennecfoxen wrote: post #15

The 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…

There is a third option. Apply the same regulations to the manufacture of all products sold in your country. You want to manufacture in China and sell in the US, that's fine -- but you have to do it in accordance with US environmental rules.

That does two things. One, no more cost advantage to global manufacturing in whatever place has the least respect for the environment, which lets others compete better and removes the race to the bottom. Two, there are lots of different and potentially conflicting rules everywhere, so then you get more specialization as there is an advantage to smaller companies that only comply with the rules for the markets where they're selling.

Re: Is It Time to Rethink Globalized Supply Chains?

#32

Post by hef19898 »

zozbot234 wrote: post #5
SpicyLemonZest wrote: post #3

It 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…

> It seems to me like the problem is just that supply chains aren’t legible. There are a number of efforts to make supply chains in all sorts of sectors more transparent using blockchain-like protocols. So this will hopefully improve in the future.

Over a decade ago, the supply chain hype was RFID chips. Now, more htan ten years laer, they are not used besides your occasional pallet tracking. or for hteft preventin at shops. And RFID would just have replaced bar codes, so no process changes necessary for a first implementation.

Blockchain is a different beast. And most companies wouldn't like the full transparency that comes with it. Decentralized ledgers would result in a lot transparency for everyone. And that trust building is a main issue. That, and that the information flow (blockchain) has to be always sychronized with the physical flow (goods).

Re: Is It Time to Rethink Globalized Supply Chains?

#33

Post by j-c-hewitt »

elliekelly wrote: post #17
j-c-hewitt wrote: post #14

Earlier quoted context omitted.

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?

Kicking off any sellers for the specific products in the catalog not using Transparency, providing assurances to buyers that the products are authentic. Making money for Amazon because they charge a fee for every unit.

https://brandservices.amazon.com/transparency

(Not employed by Amazon, but work with many Amazon sellers, am an Amazon seller)

Re: Is It Time to Rethink Globalized Supply Chains?

#34

Post by DoofusOfDeath »

fennecfoxen wrote: post #15

The 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…

> The 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.

We should qualify the term "irresponsible" here:

1) If we somehow avoid events like covid19 for an entire decade (for example), in retrospect the self-imposed inefficiencies could be called "irresponsible". I think the real issue is that there are costs associated with guessing wrong in either direction regarding when these events will occur.

2) Just a guess, but I would think having interdependent supply chains reduces the chances that those countries will go to war. Giving up that benefit could also be seen as irresponsible.

Re: Is It Time to Rethink Globalized Supply Chains?

#35

Post by ibeckermayer »

fennecfoxen wrote: post #15

The 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…

Events like this should weed out firms with irresponsible supply chains, unless we’re forced to bail them out.

Re: Is It Time to Rethink Globalized Supply Chains?

#36

Post by tvanantwerp »

I feel like the problem is less that supply chains are globalized, and more that they aren't redundant. By that I mean, there's too much reliance on China as the primary producer/exporter for countless industries and products. Having just one nation account for such a large share of manufacturing introduces single points of failure. It would be wise to have multiple sources for any given good, especially if it's essential.

Re: Is It Time to Rethink Globalized Supply Chains?

#37

Post by whatshisface »

tomp wrote: post #26
jonrimmer wrote: post #19

The 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.

Obviously. It needs to be enshrined in law. Stress tests, like for banks. It would also be more efficient / profitable for banks to keep lower capital reserves... Edit: alternatively, countries could be much more trigger-happy when it comes to banning flights from potentially infected areas where some kind of virus starts - basically a lot of false alarms. Companies would simply have to adapt.

Another possibility: don't do any industrial bailouts and let high-risk investors take their medicine. Next time, risky businesses will find it more expensive to get capital, as investors realize some things they weren't thinking about before.

Re: Is It Time to Rethink Globalized Supply Chains?

#39

Post by Gustomaximus »

marcosdumay wrote: post #22

Hum, nope. We will not rethink globalized supply chains. It's a good time to invest in research about knowledge protection and flexible production. It's also a good time to invest in emergency production capacity (best if it's of the flexible kind) by the government, most likely inside the military. (It may also be a good time for most countries to rethink the role of the military.) But we will not adopt suboptimal m…

> But we will not adopt suboptimal methods on the private economy. It doesn't work that way.

It does. Many business in many natiins are encouraged or forced to remain domestic for strategic reasons. Eg why were car companies in US bailed out. Ports are very restricted. Semiconductors. Farmland. Aero industry. Steel manufacturing etc.

This is often done for security rational. And what nations consider 'for security' may well expand post Coronavirus.

Re: Is It Time to Rethink Globalized Supply Chains?

#40

Post by trimbo »

jimbob45 wrote: post #16

Counterpoint: 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…

Fascinating link, I had no idea YKK was like that.

Vertical integration stories like this, or Ford's Rouge plant[1], make me reconsider my general predisposition towards "buy" in the software space.

For many years, I've argued against building software you can easily buy or download, but maybe reinventing the wheel is not so terrible if someone wants a company to be long-lived. Primary benefit is the software can be customized for the company's specific needs and not held back by other companies' software, of course. But even if using open source, it can help avoid fad software trends, or the whiplash-speed changing of standard tools/libraries (e.g. the open-source client-side Javascript world).

[1] - https://en.wikipedia.org/wiki/Ford_River_Rouge_Complex

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