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What caused all the supply chain bottlenecks?

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Re: What caused all the supply chain bottlenecks?

#181

Post by blhack »

legitster wrote: post #158

No, no, no! Stockpiling is not a solution to a bottleneck! In the grand scheme of things, having a couple weeks of extra inventory on hand will not help you weather a 100 year storm. But it will increase waste - inventory that you have to throw away when there are defects or when they become obsolete. Imagine trying to predict the run on lumber, and the solution was to have kept a bunch of lumber sitting in yards rot…

He's not suggesting stockpiling, he's suggested increasing the amount of RAM in the system (to us a computer analogy).

Re: What caused all the supply chain bottlenecks?

#182

Post by marginalia_nu »

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.

Well at the same time, Factorio teaches you that you need some buffers to build a fault tolerant factory.

Factorio often has implicit buffers through its belts (or bot network). If you build an inserter-only factory you'll become painfully aware how important they are to to the smooth operation of the factory. Otherwise it's very easy to get rolling waves of cascading backpressure, where the entire factory is only able to produce at good efficiency as long as you have fully saturated input as well as complete consumption of every product you produce.

Re: What caused all the supply chain bottlenecks?

#183

Post by dzonga »

Consultant32452 wrote: post #88
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…

In wealthy countries like the US it might be harder to get that new XBox you wanted. In the rest of the world there's hundreds of millions of people who are starving to death. https://www.pbs.org/newshour/show/pandemic-could-mean-260-mi...

as someone originally from a 3rd world country. I can truly say never trust what the UN or any of those big NGO's say. It's propaganda pushing a narrative. what causes starvation in most poorer parts of the world are western induced climate change i.e draughts, floods etc. Then of course political instability

Re: What caused all the supply chain bottlenecks?

#184

Post by kbenson »

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…

> He's wrong to suggest that the billionaire class and founders

What? How did you get billionaire class and founders? He specifically says founder led companies and family owned businesses. Unless you reduce that group to the Waltons, how does family owned businesses equate to the billionaire class?

"Only founder led companies and family owned businesses can stand up to the immense pressure from the dogmas of modern finance."[1]

1: https://twitter.com/typesfast/status/1453753942228160515

Re: What caused all the supply chain bottlenecks?

#185

Post by three14 »

Why would you expect a company that pays for buffers to be able to compete with a company that doesn't, even if the first company is owned by benevolent founders? Shouldn't the company that's cut inventory to a minimum be able to charge less than the competition, and drive the high-inventory competition out of business? I understand that not having inventory might create long-term problems, but how is the high-inventory company supposed to compete during the good times?

Re: What caused all the supply chain bottlenecks?

#186

Post by KingMachiavelli »

How bad are the supply chain bottlenecks really? Compared to the amount of discussion on the matter they seem pretty minimal outside a couple sectors. I certainly don't see any lack of products being sold at grocery and big box stores. The only exception I see are some hot items like GPUs and game consoles but I don't they the supply chain itself is the constraint but rather the actual silicon.

The only significant example I can think of is the car market. If you sold or didn't have a car pre-pandemic then getting one now is going to be expensive both new and used. Then again I have scene dozens of used cars sitting in parking lots (w/o license plates and with old car rental decals) so I'm starting to think there is some scalping going on in that market as well.

Re: What caused all the supply chain bottlenecks?

#187

Post by dragontamer »

bhelkey wrote: post #177
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.

> 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. A shortage in real life causes critical issues for real people. A shortage in Factorio does not.

> A shortage in real life causes critical issues for real people. A shortage in Factorio does not.

An iron shortage in Factorio causes my iron plates to run out. My iron plates feed the steel furnaces. The steel furnaces build ammo. My ammo is automatically belted to my defensive garrisons. Then the bugs completely wipe out my base, because I was out of ammo.

Going backwards: Understanding why I'm out of ammo requires me to understand why I'm out of steel, which requires me to understand why I'm out of iron, which requires me to walk over to the mines and realize the mine is out.

----

Now lets see what happens with buffers.

Understanding why I'm out of ammo: wait, I'm not out of ammo. I've got thousands of ammo buffered up right now. As such, I don't fix the problem for 2 or 3 hours.

2 or 3 hours later: my ammo runs out. I then begin the process of figuring out that I'm out of iron. When you have buffers, its hard to tell where your bottlenecks are: buffers make it _seem_ like you have plenty of supply, when in reality, the iron mine ran out a long time ago.

------

Now look at real life. The same thing happens. Toyota had a large buffer of critical chips so that it could feed its factory for months after the chip shortage started (https://www.reuters.com/article/us-japan-fukushima-anniversa...).

Oh right. Lol, guess what? Woops, Toyota has run out of chips (https://www.nytimes.com/2021/09/10/business/toyota-productio...)

Re: What caused all the supply chain bottlenecks?

#188

Post by paganel »

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 think economists call it rent-seeking.

There was a book published a couple of years ago (before the pandemic) which was "demonstrating" (so to speak) that going back through history real financial/economic levelling at a reasonable scale only happened as a result of violent means (wars, revolutions etc).

I think what those violent means do (among other, more nasty things like people getting killed) is that (in some cases) they obliterate the societal/institutional structures on which a specific rent-seeking system is based, which gives the majority of the people a chance to "level up" until a new rent-seeking system takes shape.

Re: What caused all the supply chain bottlenecks?

#189

Post by ajsnigrutin »

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…

JIT works just fine with stuff that's simple to make or close by geographically. Car seat covers? Many textile firms around you? Sure, do it JIT... if one of them fails or gets wiped out by a tsunami, there are ten more than can take over the production.

Computer chips? Made only in one company in china? Trying to get someone else to make them, means weeks or months of production line changes + waiting time + other customers... good luck. If they're far away (eg. china), and the transport system is fucked up, you're basically fucked up too. Even a huge company like toyota can't make a chip factory "overnight" anywhere.

Re: What caused all the supply chain bottlenecks?

#190

Post by ARandumGuy »

snowwrestler wrote: post #92

Mandating a lower-than-maximum container stacking height was itself a buffer, which is now being filled by temporarily stacking higher. The idea that we run without buffers in the supply chain is contradicted by his own big idea to use one of them. We don’t have big warehouses full of inventory sitting around like we used to, true. But we do have the money we generated by running more efficient supply chains, and mon…

Money doesn't do you much good if you can't actually spend it on anything. Getting rid of warehouses full of car parts to save some cash doesn't do a lot of good when no one can sell you car parts for any price.

Buffers won't solve a long term shortage, but they can prevent a short term shortage from cascading. When the entire global economy is running with minimal buffers, then the effects of supply disruptions can last years, and that problem can't just go away by throwing money at it.

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