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What caused all the supply chain bottlenecks?

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Re: What caused all the supply chain bottlenecks?

#121

Post by Mikeb85 »

callmeal wrote: post #74
Mikeb85 wrote: post #17

Really? Forced shutdowns -> things not being made -> not enough things... It's basic supply/demand. If demand stays the same but supply is interrupted, production needs to increase for the same amount of time just to satisfy the demand that went unfulfilled. If supply is interrupted and 'reopening' simply means going back to initial production, you'll always be playing catch up.

It's not that simple. Modern (just-in-time) practices have created a situation where a single change in customer demand leads to widespread supply shocks. Take a look at the beer game[0] for a smaller version of real life. That's what happened here - lockdowns led to a single change in customer demand for a wide variety of goods both on the personal side(more people at home -> snacks, food, toiletpaper that would hav…

It's always more complicated. It's also always that simple.

Consumer preferences changed slightly *because* of lockdowns in addition to supply changing drastically *because* of lockdowns.

In our just-in-time supply chain system, interruptions of the magnitude we experienced aren't accounted for.

Re: What caused all the supply chain bottlenecks?

#122

Post by [deleted] »

kwertyoowiyop wrote: post #101
CityOfThrowaway wrote: post #79

Earlier quoted context omitted.

First one thing, and then the next. The spiral is in its early innings right now. Hold on tight!

With shipping containers being sent back to Asia empty rather than taking an extra leg to mid-America to fill up on US farm products to sell in Asia, is the price of soybeans and corn in Asia going to spike soon?

[deleted]

Re: What caused all the supply chain bottlenecks?

#123

Post by SkittyDog »

simonh wrote: post #57
evilotto wrote: post #33

He's right to point out that the obsession with RoE is a big part of the problem. He's wrong to suggest that the billionaire class and founders will solve the problem if we only trust them and let them keep their money. Founders have just as much incentive to optimize the excess out of the system, they just call it "disruptive innovation" by which they mean tweaking how the system works so that they can squeeze out p…

You have it backwards. Rents are revenue accrued due to the ownership of a resource, such as grants, subsidies, tax breaks and loaning or leasing an asset. Optimising out excesses is minimising the holding of assets, so it’s directly antithetical to rent seeking strategies.

In the terms "economic rent" and "rent seeking", the concept of rent is not specific to assets. Rent paid to landowners was the original inspiration for the terminology, but in actual usage it refers to any economic behavior that extracts value without creating new value.

• https://en.m.wikipedia.org/wiki/Rent-seeking

Notably, this usage does not include "providing liquidity", so most of what hedge funds and private equity do for a living is rent seeking, by definition.

So the parent commenter's usage appears to be correct... If it's any consolation, I was under the same mistaken impression as you for a long time.

Re: What caused all the supply chain bottlenecks?

#124

Post by 015a »

justinator wrote: post #55

Sorry, I don't trust this guy. It was just explained how he uses social media to manipulate the story he tells. https://thezvi.wordpress.com/2021/10/28/an-unexpected-victor...

Are you really, actually sorry, or are you just saying that to soften your message? Isn't that manipulation?

Re: What caused all the supply chain bottlenecks?

#125

Post by philwelch »

evilotto wrote: post #33

He's right to point out that the obsession with RoE is a big part of the problem. He's wrong to suggest that the billionaire class and founders will solve the problem if we only trust them and let them keep their money. Founders have just as much incentive to optimize the excess out of the system, they just call it "disruptive innovation" by which they mean tweaking how the system works so that they can squeeze out p…

I’m not sure this is the case. The problem is that RoE is a metric that can be gamed for short term gains while incurring long term risks. This is more likely to be an issue with short term career-oriented leadership. Founders are more likely to have a concern for the long-term success of the business. Simply put, founders are not the people sacrificing their own companies’ long term success in exchange for enhancing their personal careers.

A lot of the JIT fashion came from Toyota, and yet Toyota doesn’t seem to suffer from these issues as much as others. I don’t think it’s any coincidence that most of the senior executives of Toyota have all been at Toyota for longer than many of us have been alive, and that the company president is the grandson of the company founder.

Re: What caused all the supply chain bottlenecks?

#127

Post by marcosdumay »

mfer wrote: post #60
cmenge wrote: post #11

Hm, seems like a monocausal 'explanation' of a complex problem - or let's say a mere opinion with little background information. Given the 'hundred year crisis', I think we have fared relatively well from a purely economic point of view... So, yes, some problems may exist but I think we have witnessed a surprisingly resilient system, given how optimized everything is and how unprecedented the issue is. I don't know i…

> I don't know if a slight price increase in graphics cards is the key issue to worry about at this point. The price increase in graphics cards isn't related to this. GMs trouble selling cars because they don't have enough chips to finish off the cars is a problem related to the pandemic and planning like the posts on Twitter note. The lack of new cars available has driven up prices on used cars. This is all supply c…

> In the last 130 years there have been two world wars and two global pandemics.

Delays on intercontinental shipping and lack of availability of a few durable goods is a perfectly fine price to pay on that frequency. Optimizing to surviving a global pandemics without any problem would be ridiculous expensive.

Yes, specifically on the subject of cars, the manufacturers seem to be accepting way more risk than what is sensible. But that's their decision to make. If they were just left to face the costs of their decisions, they would stop making bad ones quite quickly.

(By the way, there were 2 flu pandemics similar or worse than this one on the last 100 years. That's one more than you are counting.)

Re: What caused all the supply chain bottlenecks?

#128

Post by allturtles »

zamadatix wrote: post #50
allturtles wrote: post #16

Earlier quoted context omitted.

I really don't understand what you mean by this comment. The only swaths of the economy that I'm aware of that got shut down in the U.S. are things like bars, restaurants and movie theaters. These are not tightly connected to global supply chains, AFAIK, and if they were why would their shut down cause bottlenecks (it should lessen demand, not increase it)?

Thinking about it from the perspective of someone who thinks the shutdowns were net good but reviewing the comment in good faith: Lessened demand in large sections of the economy can itself create shortages in the parts that take on the load or at least stress on the supply chain to redirect to those places now in extreme demand. Take restaurants for example, people didn't stop eating but vast swaths of food supply c…

Much of the problem with understanding what GP means is that 'the shutdowns' is a very hazy term. Implicit in the comment seems to be the idea that there was some small set of authority figures who decided to shut down the global economy and if only they hadn't done that things would be better.

e.g., The induced demand from work from home you mention I wouldn't count as part of any 'shutdown' at all. It has been largely driven organically by the decisions of individual firms and workers. My office was ordered to work from home by company HQ, not by any government authority, and at this point staying WFH is an individual voluntary choice. Does this count as part of the 'shutdown'? Certainly my sector of the economy (software development) was not shutdown, quite to the contrary.

Re: What caused all the supply chain bottlenecks?

#129

Post by Johnny555 »

xondono wrote: post #62

While I agree that a lot of companies have been screwing up the supply chains and their providers ( cough automotive cough ), maybe we should not build extra widgets just to support events that happen 1 out of every 100 years. Not every system is a critical system, not all systems require spare capacity.

Maybe we should not build extra widgets just to support events that happen 1 out of every 100 years.

Except the COVID pandemic is probably not a 1 in 100 year event, the last SARS epidemic was less than 20 years ago (and fortunately was not as disruptive as the current one). I wouldn't be surprised if the next one is within a decade. And we've done little to prepare for it.

Re: What caused all the supply chain bottlenecks?

#130

Post by whatever1 »

FeepingCreature wrote: post #96
whatever1 wrote: post #56

Earlier quoted context omitted.

“cause reduced private ownership of large companies, resulting in a reduced ability to handle 100-year flood events.” How the market speculation on the value of a company can affect its resiliency ? If tomorrow everyone sold Apple stock for 1 cent, why would Apple the company care ? Same revenue, same costs. Give me a break with the importance of the stock casino.

It would impact Apple's ability to raise money on the stock market tho.

Banks are in the business of giving loans and they pay professionals to evaluate the assets of borrowers.

That is in contrast to me and everyone else who just gamble collectively.

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