Is It Time to Rethink Globalized Supply Chains? • Hacker News Board

Re: Is It Time to Rethink Globalized Supply Chains?

#141

Post by gowld » Thu, Mar 19, 2020, 5:30 PM UTC

droopyEyelids wrote: post #112

alexose wrote: post #64

Earlier quoted context omitted.

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 family is in manufacturing and everyone is acutely aware of their supply chain, and there are whole departments in the companies dedicated to sourcing and testing it all. Supply chain management is like 50%+ of all manufacturing industry. I think you must be responding to the idea of like a hospital not knowing where their masks come from- and I don't think thats the focus of the article.

Does your company monitor its entire supply chain, or its supply links?

Re: Is It Time to Rethink Globalized Supply Chains?

#142

Post by tomp » Thu, Mar 19, 2020, 5:31 PM UTC

stickfigure wrote: post #107

wtdo wrote: post #70

Earlier quoted context omitted.

That's true so long as everyone is dependent on each other. If, everyone is dependent on one country, that doesn't hold China has a near monopoly on a lot of production. Countries that depend on them certainly won't go to war with them, but that doesn't hinder China from starting a war with those countries, and even gives them an advantage. And it doesn't stop dependent countries from warring with each other and that…

Trade goes both ways. The seller of goods is just as dependent on the exchange as the buyer. Nobody stays in business going to war with their customers. And there are truly very few products that cannot be sourced from alternates given a little time and money. I think the "global interdependence reduces war" hypothesis is pretty strong.

Money is fake in a way that physical products aren't. So the parties have very unequal bargaining positions, the one with the "real" stuff (products) can walk away much more easily than the one with the "fake" stuff (money).

Re: Is It Time to Rethink Globalized Supply Chains?

#143

Post by vibrolax » Thu, Mar 19, 2020, 5:33 PM UTC

TeMPOraL wrote: post #118

unethical_ban wrote: post #114

Earlier quoted context omitted.

I said this last night to a friend: The United States (and all nations really) need to look at supply chains the way we look at AWS regions. You don't build anything in just one region when it's in production - you always have redundancy, in this case, geographical and political redundancy if possible. We have strategic reserves of petroleum, foodstocks, and other necessities. It is time to think about the same with…

It's not stupidity that caused supply chain fragility. People involved understand the benefits of redundancy. It's the market that doesn't . It's fundamentally unable to protect itself against black swan events, because they're (by definition) outside of its optimization horizon. Redundancies and buffers that could protect us from once-in-couple-decades events are considered as "fat", and are cut off by competitive p…

The value of robust and redundant supply chains only becomes manifest when serious disruption actually occurs.

In vast swaths of both the consumer and industrial economy, the supply chain bean counters have tolerated no argument for choosing anyone besides the low cost supplier.

Cost optimizations were the only rewarded metrics.

Re: Is It Time to Rethink Globalized Supply Chains?

#144

Post by belorn » Thu, Mar 19, 2020, 5:35 PM UTC

tvanantwerp wrote: post #36

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 esse…

From what I have heard and seen, the reason is that there isn't any other place where labour is that cheap. In combination with very cheap transport costs (which may be quite subsidized in order to encourage trade), what you get is a single location where almost all production occur.

A extreme example I have heard of (could of course be false) is that some fish from the north parts of Norway get sent to be processed and packaged in china in order to be imported back at the same place where it was once fished.

If we want more redundancy by encouraging more spread out production there would need to be something to balance the desire to just move production where labour is cheapest.

Re: Is It Time to Rethink Globalized Supply Chains?

#145

Post by pembrook » Thu, Mar 19, 2020, 5:36 PM UTC

Often, when bad things happen, humans tend to go broad and deep and question everything around them. This is the wrong approach, IMO. Nobody has the power to alter everything around them, so nothing gets done.

If we look at history, we see tiny, continuous improvements in reaction to bad events are what have led to the relative stability of modern life. Bad thing happens, we figure out the (usually small) root cause, then we stop it.

For example, when the automobile emerged, we learned that allowing people to drive without rules resulted in gridlock and frequent crashes. Did we ban automobiles altogether? No. We created regulations (traffic rules), and improved the issue.

Then we then learned that more people die in car crashes if they have nothing protecting their body in a crash, so we created seatbelts. Then we learned they still needed cranial protection in a crash. We created airbags, and improved the issue. And so on.

After coronavirus, the solution is not to lock down global supply chains and force everybody to stay indoors forever. The solution is easy. We simply change regulations and practice around the storage of certain animal species. Until the next thing comes along, and we tweak our model of the world again to address it.

This is not complicated. Human life is one giant continuous improvement model.

Re: Is It Time to Rethink Globalized Supply Chains?

#146

Post by cmurf » Thu, Mar 19, 2020, 5:36 PM UTC

jobu wrote: post #110

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.

Yeah, not only is this a once in 100years event, it's also staggered in such a way that the Chinese manufacturing will likely be caught up by the time the European and North American economies are coming back to life.

Global Viral Outbreaks Like Coronavirus, Once Rare, Will Become More Common: Urbanization, globalization and increased human consumption of animal proteins are driving a rise in epidemics

https://www.wsj.com/articles/viral-outbreaks-once-rare-becom...

Re: Is It Time to Rethink Globalized Supply Chains?

#147

Post by at-fates-hands » Thu, Mar 19, 2020, 5:37 PM UTC

TeMPOraL wrote: post #118

unethical_ban wrote: post #114

Earlier quoted context omitted.

I said this last night to a friend: The United States (and all nations really) need to look at supply chains the way we look at AWS regions. You don't build anything in just one region when it's in production - you always have redundancy, in this case, geographical and political redundancy if possible. We have strategic reserves of petroleum, foodstocks, and other necessities. It is time to think about the same with…

It's not stupidity that caused supply chain fragility. People involved understand the benefits of redundancy. It's the market that doesn't . It's fundamentally unable to protect itself against black swan events, because they're (by definition) outside of its optimization horizon. Redundancies and buffers that could protect us from once-in-couple-decades events are considered as "fat", and are cut off by competitive p…

>> Redundancies and buffers that could protect us from once-in-couple-decades events are considered as "fat", and are cut off by competitive pressure.

THIS.

My brother-in-law owns a company and they put in place a ton of redundancies after the 08' crash. They're in a specialized manufacturing. After 6-7 years of stability and some of their markets recovering and stabilizing, he started getting pressure from his two partners to cut the safety nets and re-invest it in supply chain improvements. He was against it saying the same thing, "This isn't a five or six year plan, it's a permanent plan to protect the company." In short, he was outvoted. The redundancies were removed and the money was re-invested in other areas. .

The last week basically saw their entire supply chain shut down, almost all of their customers shut down and yesterday they had to send everybody home and shut down themselves for the time being.

My brother in law texted me saying, "This is the worst fucking "I told you so" in my life, I'm not sure we can survive this." He's meeting with his partners this week to assess the damage and how long they can survive before they'll need an influx of capital to keep the lights on.

Had they kept all of their money tied up in their emergency plan, they would've been able to pivot to other suppliers and continue to serve their clients. Right now? They put all their eggs into one basket and it could very well kill the company.

Re: Is It Time to Rethink Globalized Supply Chains?

#148

Post by hilbertseries » Thu, Mar 19, 2020, 5:38 PM UTC

pembrook wrote: post #145

Often, when bad things happen, humans tend to go broad and deep and question everything around them. This is the wrong approach, IMO. Nobody has the power to alter everything around them, so nothing gets done. If we look at history, we see tiny, continuous improvements in reaction to bad events are what have led to the relative stability of modern life. Bad thing happens, we figure out the (usually small) root cause,…

The wet markets were already illegal. I’m not sure that betting we can prevent another pandemic is the right approach here.

Re: Is It Time to Rethink Globalized Supply Chains?

#149

Post by asdfman123 » Thu, Mar 19, 2020, 5:40 PM UTC

tvanantwerp wrote: post #36

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 esse…

How do you build in redundancy, though? If China makes widgets for $0.13 a unit and the US makes widgets for $0.15 a unit, how do you incentivize people to buy some of them from China, and some of them from the US? It seems like the logic of free trade and specialization dictates it's mostly all-or-nothing.

That's a genuine question, by the way. I'm curious.

Re: Is It Time to Rethink Globalized Supply Chains?

#150

Post by Invictus0 » Thu, Mar 19, 2020, 5:44 PM UTC

Executives aren't paid to build resilient organizations, they're paid to return capital to shareholders. Until you incentivize them otherwise, it won't be a priority. Right now, everyone is content to throw their hands up saying "it couldn't have been predicted" and then return to business as usual once the crisis blows over.