I hate to make this political, but in a neutral sense: is this not precisely what Trump ran and won the election on? I didn't vote for him, but clearly the offshoring of factories to China has had serious negative consequences. These were noticed by everyone in "flyover country" a decade ago, but the coronavirus seems to have made everyone aware of the downsides of distributed supply chains, especially to a totalitarian state in a time of crisis.
Is It Time to Rethink Globalized Supply Chains?
81–90 of 322 posts
Re: Is It Time to Rethink Globalized Supply Chains?
#82Earlier quoted context omitted.
Exactly! I have always thought it was insane from a national security perspective to allow functionally all of key manufacturing capabilities (e.g., microprocessors) to go offshore. Nevermind the risks of inserted backdoors, etc, just the external sources of failure rapidly become too great. Yes, this would require subsidies & regulations, and be on a quarter-to-quarter and in most fiscal years "inefficient" use of c…
> I have always thought it was insane from a national security perspective to allow functionally all of key manufacturing capabilities (e.g., microprocessors) to go offshore. I am not sure, a completely dependent world may make us safer as wars will very hard to execute.
> I am not sure, a completely dependent world may make us safer as wars will very hard to execute.
But "safer" doesn't necessarily mean "no wars." It's rare, but sometimes wars are just (e.g. ones against those who commit crimes against humanity). A world so economically interdependent that war is truly unthinkable is one where even peaceful coercion like sanctions are too costly to pursue. I don't want economics to enslave morality.
Re: Is It Time to Rethink Globalized Supply Chains?
#83Earlier quoted context omitted.
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 remove…
There's a fourth option: close down all U.S. trade ports for a month once a year. No paperwork or other administrative headaches. "Just" a dry run once a year.
I think the power grid is tested like that once in a while after the 2003 blackout - https://en.wikipedia.org/wiki/Northeast_blackout_of_2003#Lon...
Re: Is It Time to Rethink Globalized Supply Chains?
#84The 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.)
This is genius. Better to have an artificial failure inducing system that have rare but catastrophic natural failures.
This really should be implemented!
Re: Is It Time to Rethink Globalized Supply Chains?
#85I 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 esse…
In my experience, it's not that companies are choosing any one strategy over another. It's more that companies have no idea what their supply chain actually looks like. Only that the widgets show up at their loading dock every week, and that the shipments have always been reliable in the past, so that there's no reason to look any further. There are often strong disincentives, as well. Nike, for example, got themselv…
My current position is involved in Supply Chain, and this hits the nail on the head.
There are so many different departments with fragmented knowledge of the supply chain that isn't shared or sometimes even documented.
One of the senior people trying to fix this specifically mentioned Walmart as an example of having their supply chain being a competitive advantage because they focused on it so much.
I think Apple was also one of the ones we discussed.
Re: Is It Time to Rethink Globalized Supply Chains?
#86The 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.
> 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.
That's correct. It's a market failure that needs to be remedied through law and regulation.
Hyper-specialist species can amazingly exploit their niche, but they're the first suffer and go extinct when things get disrupted. It's the generalists that survive.
Re: Is It Time to Rethink Globalized Supply Chains?
#87Earlier quoted context omitted.
> They don't make the computers, fiber optics, switches, exchanges, or software that their web site requires to run. Because they don't need to. The quality of their network setup has no, utterly no, relationship to the quality of the final product - the machines and materials however do have such a relationship and therefore it's done in-house. Additionally this vertical integration removes the incentive for a suppl…
Vertical integration can certainly be a great approach and can have many advantages. It can also limit your risk of exposure to outside events. However, my point is and was that controlling your whole supply chain is impossible. Computers are critical to everyone's supply chain, including YKKs. If they aren't and YKK can fall back to pen, pencil, and paper then they are dependent on those manufacturers and industries…
Well, Kodak tried to breed it's own cows, to control the quality of gelatin (used in film manufacturing) https://www.fastcompany.com/1806686/way-kodak-died
Did not work that well.
Re: Is It Time to Rethink Globalized Supply Chains?
#88I 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 esse…
In my experience, it's not that companies are choosing any one strategy over another. It's more that companies have no idea what their supply chain actually looks like. Only that the widgets show up at their loading dock every week, and that the shipments have always been reliable in the past, so that there's no reason to look any further. There are often strong disincentives, as well. Nike, for example, got themselv…
This is it 100%. I work at a major financial institution and we invest ridiculous amounts of money, effort and, frankly, delay, in understanding our supply chain, its security posture and risk management model. It's a unbelievably gargantuan effort and if it weren't for the scary shit that we find all the time one could easily argue it's a waste.
Re: Is It Time to Rethink Globalized Supply Chains?
#89Counterpoint: 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…
Never heard of them. Their company setup is pretty impressive. However to say 'relies on absolutely no one else for its supply chain' is an extreme exaggeration and frankly impossible. They don't make the computers, fiber optics, switches, exchanges, or software that their web site requires to run. They don't own the fleet of trucks, boats, and planes required to get their product to their customers - or their raw ma…
>Never heard of them.
We had an argument in a CS class once about what the most "pervasive technology" in the room was. We were examining claims that "computing would become so pervasive and ubiquitous that it would become invisible" like electricity and that zipper.
The reason it won was because we could count more of them than any other piece of tech in the room. Every person had more than they thought -- often as many as half a dozen between their pants and schoolbag.
Re: Is It Time to Rethink Globalized Supply Chains?
#90Earlier quoted context omitted.
> They don't make the computers, fiber optics, switches, exchanges, or software that their web site requires to run. Because they don't need to. The quality of their network setup has no, utterly no, relationship to the quality of the final product - the machines and materials however do have such a relationship and therefore it's done in-house. Additionally this vertical integration removes the incentive for a suppl…
Vertical integration can certainly be a great approach and can have many advantages. It can also limit your risk of exposure to outside events. However, my point is and was that controlling your whole supply chain is impossible. Computers are critical to everyone's supply chain, including YKKs. If they aren't and YKK can fall back to pen, pencil, and paper then they are dependent on those manufacturers and industries…
The difference is that they can ride out a supply chain interuption for months for non consumables that aren't a direct part of the manufacturing process.
Giving them time to find alternative suppliers for things like computers and pencils.
If they instead depended on consumables like say zipper teeth, they would have to shut down almost immediately in the case of a supply chain interuption.