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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?

#181

Post by hinkley »

jcims wrote: post #88
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…

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.

I mean, imagine you have a 3 year contract with a supplier, and when you go to renew they get cagey and seem to be giving you the runaround. Later you find out that it's because they already signed a contract with one of your competitors that begins the day after your old contract expires.

We laugh about golf and Vegas visits, but it's really hard to stab someone in the back when you're used to looking them in the eye. If they're just some suit you meet once every three years? Fuck 'em.

Re: Is It Time to Rethink Globalized Supply Chains?

#182

Post by implements »

jcims wrote: post #92
moufestaphio wrote: post #85

Earlier quoted context omitted.

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…

WalMart turned their supply chain into a competitive advantage 30-40 years ago. I saw it as an employee first, their inventory control in the store was ridiculous back in the 80's. Then I saw it again working with an EDI shop (Sterling Commerce) in the 90's. Everything was electronic. We'd get these little mom and pop shops calling in trying to get their bisync modems working so they could upload their ANSI X12 810's…

Sterling Commerce - that’s a name I haven’t heard in a •long• time. Do you by any chance remember a company called “EDES” (Electronic Data Exchange Service)?

Re: Is It Time to Rethink Globalized Supply Chains?

#183

Post by downerending »

alexose wrote: post #64
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…

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…

Arguably a benefit of substantial tariffs is that it gets that message through (i.e., your supply chain may not be nearly as reliable as you think).

Re: Is It Time to Rethink Globalized Supply Chains?

#184

Post by clairity »

dv_dt wrote: post #96
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…

They have a complete idea, its just that the globalized option is cheaper, even fractions of pennies cheaper, and is directly measured in the profit margin, while the risk, if it shows up at all, is buried in the footnote of a 10-Q or annual report. Ideas like regionalization and flexible manufacturing are great ideas, in most cases, the capital machinery of factories are relatively easy to replicate and setup (harde…

that's also where i've landed on the tariffs issue. theoretically a bad idea, but has practical uses beyond purely economic considerations.

good tariff policy is hard to achieve in divisive political environments however. for instance, in many cases, you'd want them to go away dynamically as conditions improve, but lawmakers hate giving away their levers of power.

Re: Is It Time to Rethink Globalized Supply Chains?

#185

Post by TeMPOraL »

stormdennis wrote: post #169
at-fates-hands wrote: post #147

Earlier quoted context omitted.

>> 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 p…

This is good then. The company with the cheaper but vulnerable supply chain suffers and the companies who paid a premium for robustness in their chain benefit. That's how capitalism is supposed to work I think.

Except the market has very short memory. In the next couple of years, the more robust companies that survive this pandemic will get outcompeted by less robust companies, or forced to become less robust themselves.

Re: Is It Time to Rethink Globalized Supply Chains?

#186

Post by Retric »

clairity wrote: post #184
dv_dt wrote: post #96

Earlier quoted context omitted.

They have a complete idea, its just that the globalized option is cheaper, even fractions of pennies cheaper, and is directly measured in the profit margin, while the risk, if it shows up at all, is buried in the footnote of a 10-Q or annual report. Ideas like regionalization and flexible manufacturing are great ideas, in most cases, the capital machinery of factories are relatively easy to replicate and setup (harde…

that's also where i've landed on the tariffs issue. theoretically a bad idea, but has practical uses beyond purely economic considerations. good tariff policy is hard to achieve in divisive political environments however. for instance, in many cases, you'd want them to go away dynamically as conditions improve, but lawmakers hate giving away their levers of power.

I am convinced a low tariff of ~3% on all goods and services to every country is a good idea. But that’s never what happens, you get a huge mix of zero to insanity based on which industries have political power. As such a blanket ban on tariffs became a rallying cry.

Food is often used as the counter example, but IMO domestic production is less valuable than a multi year stockpile.

Re: Is It Time to Rethink Globalized Supply Chains?

#187

Post by lutorm »

stormdennis wrote: post #169
at-fates-hands wrote: post #147

Earlier quoted context omitted.

>> 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 p…

This is good then. The company with the cheaper but vulnerable supply chain suffers and the companies who paid a premium for robustness in their chain benefit. That's how capitalism is supposed to work I think.

Except those companies have already folded because they couldn't compete during "normal" times.

Re: Is It Time to Rethink Globalized Supply Chains?

#188

Post by Spooky23 »

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…

The problem is that we think of the internet as the visionary stuff that was in Wired magazine in the 90s... "long tail".

The reality is that you have wave after wave of consolidation. Often the savings if any are nebulous. Most of the issues with manufacturing in western countries and the US in particular are accounting and tax based.

Re: Is It Time to Rethink Globalized Supply Chains?

#189

Post by abathur »

asdfman123 wrote: post #149
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.

Like Chaos Monkey, but with import/export bans and/or tariffs?

Re: Is It Time to Rethink Globalized Supply Chains?

#190

Post by Havoc »

epicureanideal wrote: post #153
dv_dt wrote: post #96

Earlier quoted context omitted.

They have a complete idea, its just that the globalized option is cheaper, even fractions of pennies cheaper, and is directly measured in the profit margin, while the risk, if it shows up at all, is buried in the footnote of a 10-Q or annual report. Ideas like regionalization and flexible manufacturing are great ideas, in most cases, the capital machinery of factories are relatively easy to replicate and setup (harde…

They could introduce some new GAAP rules like... Add 10% of the value of all inventory sourced outside North America as a "risk liability". Same for 10% of yearly labor that's outsourced. Basically find ways to make short term thinking visible in their financial reports, since that's what's measured and rewarded.

Not really an accounting issue & messing with those numbers to highlight a risk is just asking for trouble.

Companies are required to disclose significant risks, but the quality of that disclosure...varies.

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