Really MIT? This is news? You and other top business schools taught throngs of MBA students to outsource and manage costs to increase shareholder value. You and your peers taught many a business leader to indirectly leverage a pool of slave labor provided by a dictatorship to make cheaper and cheaper components. Ever thought how they could be so cheap? It’s called lax environmental regulations and not valuing life; suicide nets at Foxconn ring a bell? I don’t wish ill will towards anyone, and it sucks so many people are losing their jobs right now, but based on the “preservation of money” principle (think thermodynamics for money) it’s time large business leaders reap what they’ve sowed; the collapse of the business on their watch. Sucks, but, it’s a reality and something had to give.
Is It Time to Rethink Globalized Supply Chains?
271–280 of 322 posts
Re: Is It Time to Rethink Globalized Supply Chains?
#272Definitely time to rethink globalized supply chains. The centralization inherent to this obsession with efficiency is simply not resilient to disruptions. We learned to build redundancy into our food production to handle disruptions like, centuries ago, which is (partly) why we pay farmers to produce more food than we technically need. We don't invest much to keep manufacturing of some other critical goods domestic.…
If you invest the extra cost and complexity for a redundant supply chain capable of surviving a black swan event like COVID-19, but the rest of the world doesn't, and the black swan event causes a recession with massive unemployment, does it matter? The bottleneck is now consumer spending, not your ability to produce your products.
As others have said in other threads, pandemics are emphatically NOT black swan events. Making this assumption reveals a fundamentally flawed mental model which is broken for the same reason global supply chains are -- its time constant is far too short to account for major disruptive events that have extremely high probably of occurring and have well known effects on societies, and often well known methods for prevention and management. Earthquakes, and pandemics are not black swan events, and for civil engineers and state level actors neither are volcanic eruptions.
Re: Is It Time to Rethink Globalized Supply Chains?
#273Is it really a problem? Obviously, now, it is. But everything is a problem. Having the supply chain less globalized doesn't mean there is an excess. Now, there is a shortage of surgical masks, but that's because the demand is too high, not just because they are made in China. You have to balance efficiency and reliability. And normally, the global supply chain is very efficient, and surprisingly reliable. Black swan…
This is HN, so let's use tech nerd examples.
Do you want a single server handle the load, located in China?
Or a decentralized, load balanced system?
9bn users.
Go.
Re: Is It Time to Rethink Globalized Supply Chains?
#274Really MIT? This is news? You and other top business schools taught throngs of MBA students to outsource and manage costs to increase shareholder value. You and your peers taught many a business leader to indirectly leverage a pool of slave labor provided by a dictatorship to make cheaper and cheaper components. Ever thought how they could be so cheap? It’s called lax environmental regulations and not valuing life; s…
> Is It Time to Rethink Globalized Supply Chains?
"Hey guys, wait. Is neoliberalism actually a really stupid idea??"
Re: Is It Time to Rethink Globalized Supply Chains?
#275I 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…
> more that companies have no idea what their supply chain actually looks like.
Except Walmart
Re: Is It Time to Rethink Globalized Supply Chains?
#276I 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.
I'm sure people have many good ideas. Two things that come to mind are: extend the Berry Amendment to the entire US Federal Government and designate certain products such as medicine as critical and require that they be manufactured in the US in order to be sold here.
Re: Is It Time to Rethink Globalized Supply Chains?
#277I think the rethink just needs to address the need for uncorrelated redundancy. And yep, that's more expensive than the current mode of operations.
Re: Is It Time to Rethink Globalized Supply Chains?
#278Earlier quoted context omitted.
This is already partially done with Automobiles, for example. Comply with local pollution and safety standards or a lucrative market is closed to your exports.
I think you mean that for example, the US pollution standard needs to be fulfilled by Volkswagen if they like to export VW cars to the USA. However the OP meant more than that: that the VW workers, employed for example in Mexico, who assemble cars for US export would get the same worker rights as they would get in the USA. And the same would hold for pollution at the factory and so on.
That would make things cost a lot more money.
The reality is much of our economy is built off the backs of essentially slave labor. And we're all guilty of benefiting from it.
Re: Is It Time to Rethink Globalized Supply Chains?
#279Earlier quoted context omitted.
You get what you pay for. If you aren't paying for the guy to be the observer there's no one to observe.
You don't get what you pay for. But generally value derives from multiple independent credible verifiable audit mechanisms.
Or from reputation.
A company with a reputation for quality can charge more, because you don't need observers and can just rely on them. And they want to deliver on the reputation, so that they can keep milking it.
Re: Is It Time to Rethink Globalized Supply Chains?
#280Earlier 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 dad used to work for a big tech OEM and retired a few years back. He had years of supply chain flows, contacts, locations, and more for his old company in notes, his head, and Visio and was hired through layoffs for that knowledge. I think in like 2006 he was picked up by a manager who had heard him speak up in a meeting years before to explain a step in a chain and knew he knew what the company was able to do. He…
Thanks for the write-up!
> He knew the reasons for each steps like import tax avoidance, cost/benefit analysis of using one vendor/shipper/etc, or even that they used to have a specific engineer at that one factory who was amazing at QA and tolerance checking or something like that.
Excellent example. Some of those you wouldn't be allowed to document in writing, even if you wanted to.