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What caused all the supply chain bottlenecks?

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Re: What caused all the supply chain bottlenecks?

#161

Post by makomk »

JPKab wrote: post #93
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…

The obsession with RoE is really just a major form of efficiency. Having things sitting around unused is a huge reason that US car companies got their asses handed to them by Toyota and their TQM/LEAN system they developed. People writing articles like this forget that it's not just Wall Street, but competitors who created the huge pressures for adopting JIT inventory systems. There's also the consumer. Are you willi…

This. Also, the tweets complain about not having excess capacity due to the "obsession with return on investment", but that's really just an abstraction around the fact that extra capacity means using more limited real-world resources to supply people with the same amount of stuff - more land, more steel and concrete and construction labour and equipment to build the extra factory and shipping capacity that goes unused - which then can't be used for other things. The tweets frame it as though it's only finance types and investors that benefitted from this, but in reality everyone was better off in real, "what can I afford to buy with my money" terms due to it.

Re: What caused all the supply chain bottlenecks?

#162

Post by jonas21 »

The_Beta wrote: post #146
015a wrote: post #118

Earlier quoted context omitted.

I think his statement is that founder (and family) led businesses are the only businesses capable of building the shock absorbers necessary to weather hundred-year storms; not that they always will. By comparison, committee-appointed CEOs rarely, if ever, will, because they cannot.

It's not that they cannot. They don't have an incentive to do it. If I'm being paid for my performance while I'm a CEO, why would I spend money today (and hurt my performance today) to fix a problem that MIGHT affect the company in 20 years

No, they literally cannot. Because if they try to, they will be fired by the board for failing to perform and replaced with someone who will undo their work.

Re: What caused all the supply chain bottlenecks?

#163

Post by quartesixte »

philwelch wrote: post #125
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…

Toyota has over the years adjusted how their JIT operates, and are now known to stockpile certain critical parts.

This is pure speculation, but I also wonder if Japan’s geography + slightly more diverse economic landscape (lots of small businesses that do nothing but make components) help make their JIT more resilient to shocks. With Osaka, Tokyo, and Nagoya all within an area less than the length of California, it’s far easier to “in-time” material.

Re: What caused all the supply chain bottlenecks?

#164

Post by dpcx »

dragontamer wrote: post #154

Anyone who has played Factorio knows that "just in time" is far superior to actually holding reserves. If you buffer things up, you don't know where the problems in your production are. People are saying "why didn't we buffer up more" ? Well, there we go. Play Factorio. You'll see just how bad buffers are in a simulated factory.

I haven't played Factorio, so maybe I'm missing something... but if you don't have buffers and suddenly whatever that produces something essentially goes away, what happens to all your just in time pieces? Seems pretty certain that they'll all end up idle.

Re: What caused all the supply chain bottlenecks?

#165

Post by DevKoala »

dragonwriter wrote: post #147
DevKoala wrote: post #141

> Only founder led companies and family owned businesses can stand up to the immense pressure from the dogmas of modern finance. > The proposed tax on unrealized capital gains will force founders to sell larger and larger pieces of their companies to pay the tax, until eventually they lose control of their businesses and turn them over to the Wall Street sharks to run their disastrous playbook. I agree with this argu…

> Love him or hate him, with a tax on capital gains someone such as Elon Musk would not have been able to drive Tesla to profits thus forcing the automotive industry towards EV's. Yes he would have. One, because there is a tax on capital gains, and he did; you probably mean an unrealized capital gains tax, but... Two, it is quite possible (and explicitly a motivation of the proposed law, so impossible for any honest…

You think he would have doubled down on the risk? Perhaps, but I know it would have been another obstacle in the road for him. At what point does it stop being worth it for him? I do not like his social media antics, and hate to even bring him up as an example since I am tired of hearing of him. However, the guy works like a madman for goals that mainly benefit all of humanity to whom he owes nothing. History will look kindly on him and down on all of us that did so much to hold him back.

Edit: thank you for pointing out I missed the "unrealized" bit.

Re: What caused all the supply chain bottlenecks?

#166

Post by nebula8804 »

WesolyKubeczek wrote: post #115
CamperBob2 wrote: post #34

Earlier quoted context omitted.

I think we have fared relatively well from a purely economic point of view. There's no reason to think this is over yet. We might just be getting started.

Just you wait until China pulls a Crimea on Taiwan. There go our semiconductors, this time for real.

Well at least we will be going back to writing everything in C and squeezing everything out of our old legacy chips because what else can we do? Maybe the Intel/IBM/Globalfoundries fabs in the US can continue producing whatever last gen chips they are capable of.

Re: What caused all the supply chain bottlenecks?

#167

Post by simonh »

thereddaikon wrote: post #140
simonh wrote: post #57

Earlier quoted context omitted.

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.

Rent-seeking practices are not the same as a traditional Rent or Lease arrangement. They get the term because instead of buying a product that you know own and can do with as you wish, they still maintain control as if you were a renter. A topical example is consumer electronics companies designing devices to only last so long and actively suppressing the after market through DRM, difficult or dangerous to repair des…

DRM is rent seeking through control of digital assets. Patents and IP law manipulation, yes also rent seeking based on ownership of IP assets. Software subscriptions again, no question, that’s renting access to a software asset or service. These all meet the criteria I described.

Designed obsolescence is arguable though. The customer could always buy elsewhere.

Anyway tye case I was replying to is not rent seeking. Leaner businesses may be more fragile, but they are also more profitable and productive. It’s just being paid to do work.

Re: What caused all the supply chain bottlenecks?

#168

Post by rossdavidh »

Nassim Taleb calls this fragility vs. "antifragility". A system with frequent small shocks, gets information from those shocks about what to keep buffers of. A system without an absence of frequent, small shocks, keeps no reserves (like the bones of an astronaut in weightlessness too long becoming thinner, or the muscles of someone who does not work becoming smaller). Small shocks are information, and they tell a system what to bulk up on.

Long periods of tranquility, leads to fragility. Which, for many reasons (climate change? war? pandemics? disruptive technologies?) is not a good preparation for the near future.

Re: What caused all the supply chain bottlenecks?

#169

Post by Kye »

quartesixte wrote: post #163
philwelch wrote: post #125

Earlier quoted context omitted.

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…

Toyota has over the years adjusted how their JIT operates, and are now known to stockpile certain critical parts. This is pure speculation, but I also wonder if Japan’s geography + slightly more diverse economic landscape (lots of small businesses that do nothing but make components) help make their JIT more resilient to shocks. With Osaka, Tokyo, and Nagoya all within an area less than the length of California, it’s…

My understanding is this kind of alignment is essentially what makes Shenzen in China such a manufacturing powerhouse.

Re: What caused all the supply chain bottlenecks?

#170

Post by dragontamer »

dpcx wrote: post #164
dragontamer wrote: post #154

Anyone who has played Factorio knows that "just in time" is far superior to actually holding reserves. If you buffer things up, you don't know where the problems in your production are. People are saying "why didn't we buffer up more" ? Well, there we go. Play Factorio. You'll see just how bad buffers are in a simulated factory.

I haven't played Factorio, so maybe I'm missing something... but if you don't have buffers and suddenly whatever that produces something essentially goes away, what happens to all your just in time pieces? Seems pretty certain that they'll all end up idle.

Yes. Iron mines run out in Factorio. That then causes the player to search for new sources of iron to fix your supply chain issue.

-----------

In contrast, if you buffered up... you end up running out of Iron 10 hours ago. Then your buffers deplete and you're back in the same position, except you've built out your supply chain to be even more fragile than before (because you had an additional 10 hours of expansion).

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