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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?

#211

Post by golemiprague »

rileymat2 wrote: post #54
toss1 wrote: post #46

Earlier 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.

But it is never completely dependent, there are always black swans, barbarians at the gates and many other players that don't play the game according to the rules.

It's a lesson known since the collapse of the bronze age, a time where the fertile crescent was very connected and yet it all collapsed suddenly once you took one brick, namely Egypt, out of the wall. We think that the "sea people" came and disrupted it but we still don't know why, common assumptions were a pandemic or climate situation which caused them to migrate to Egypt from the Aegean sea islands. Pandemic, climate, migration, reminds you something?

On a side note, Steve Bannon was harping about the supply chain and all the issues deriving from it for a long time, everybody called him a racist and fear monger. I wonder if people would start to take him more seriously now.

Re: Is It Time to Rethink Globalized Supply Chains?

#213

Post by maerF0x0 »

Spooky23 wrote: post #134
victor9000 wrote: post #106

Earlier quoted context omitted.

What problems have you encountered that others should avoid?

Over the years, I have run into: - Counterfeit components, like memory out of spec that creates scaled failures. - Fake products from the channel. - Fundamental mistruths with regard to how services are delivered. - Poor operational practices for maintaining SLA, especially for off-shored services. Those ops folks will move mountains to meet the minimum standard of "up", but will allow problems to fester. - Fraud. Fa…

> Fraud. Named users actually being fake people sharing a credential. In one case, a colleague in a manufacturing case discovered this when he accidentally received a link to an open video stream of a MFA token.

This is a classic bait and switch in many online work platforms. The person who interviews for your open contract/role is not the person who does the work.

Re: Is It Time to Rethink Globalized Supply Chains?

#214

Post by DEADBEEFC0FFEE »

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…

Surely the problem is that there are always going to be companies willing to accept the risk of disruption. Those that can't accept that risk will have to pay more to mitigate and there costs will be higher. So it's a race to the bottom.

Re: Is It Time to Rethink Globalized Supply Chains?

#215

Post by robocat »

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.

I suspect robustness simply doesn’t work over periods of greater than a few years of competition by a vulnerable supplier.

A few examples:

1. the US has built up it’s oil producing capability. If the Saudi’s keep prices low, then everything will be mothballed. So the ecosystem of businesses and skilled staff supporting the US oil industry will massively degrade quite quickly. It can’t be ramped up quickly later.

2. Huawei. Massive shock of US sanctions. Can only be saved by amazing levels of support by Chinese govt.

3. Rare earth production. China took over the market, then shut down all exports. What producers were left and why did they still exist?

Re: Is It Time to Rethink Globalized Supply Chains?

#216

Post by DEADBEEFC0FFEE »

chillacy wrote: post #201
abathur wrote: post #189

Earlier quoted context omitted.

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

Yea I was thinking that there is some sort of parallel to datacenters, where it's lowest latency to route everyone to their closest DC but in practice people usually route a certain percentage of traffic to standby datacenters which are farther away to make sure they're still working. You lose some efficiency but gain in resilience. Nowadays big internet companies have all sorts of Disaster Recovery plans.

BCP is the way, this is all risk management. Get financial lenders to insist on insurance, the insurance companies will figure out how to measure supply chain risk.

Re: Is It Time to Rethink Globalized Supply Chains?

#217

Post by robocat »

ardy42 wrote: post #86
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.

> 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-s…

> law and regulation

In industries where innovation matters, how do you regulate for producing a good enough product?

Could you regulate Intel to fix their 10nm process?

Do you want a laptop with the reliability of a Fiat, or the reliability of a Toyota?

Not saying it is impossible, but countries quickly run inito problems when their home produced goods are strictly inferior to the imported goods on price or quality or other metrics.

Re: Is It Time to Rethink Globalized Supply Chains?

#218

Post by PeterisP »

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.

If your supplier's supplier would change their supplier of something, is that something your company would know, or are they at liberty to source their materials and parts wherever and however they want and not tell anyone?

Carefully sourcing parts is one thing, tracking the whole supply chain of where your suppliers get their materials is another.

Re: Is It Time to Rethink Globalized Supply Chains?

#219

Post by robocat »

seymore_12 wrote: post #87
bkeyes wrote: post #72

Earlier quoted context omitted.

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.

https://www.guiavegano.com.br/vegan/acervo-vegano/respostas-...

Has some background about gelatine (not breeding).

Re: Is It Time to Rethink Globalized Supply Chains?

#220

Post by vicpara »

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…

Your supplier's supplier is most of the time confidential information and part of your secret sauce. When one manages to take an omniscient seat, it's easy to see the flaws in the system. In practice this rarely is true.

Unless you have vast amount of clients and money there are almost no incentives for you to build from ground up your own supply chain. Mid size businesses, when very successful, manage to break away from a 3rd party factory and build their own. That's a massive win. Most of the raw materials will come from downstream providers and the task to get either redundancy or break away from them is going to cost you a lot of money and business margins.

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