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What caused all the supply chain bottlenecks?

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Re: What caused all the supply chain bottlenecks?

#321

Earlier quoted context omitted.

Yep, the capital owning class just doesn't care if their businesses go into shock because they already have their cash in hand. They'll never go back to pre-ROE days because they'd have to live with less money and worse less control. While they still have personal reserves in the billions they can decide the fate of their ventures but if say 20% of their current cash was on the balance sheets of corporations with boa…

R&D in 20 small companies is less effective than in 3 big ones due to less diverse teams and more inefficient double spending, e.g. twenty $5M microscopes utilized at 15% versus three at 90%.

If only we could overcome the negatives of the bureaucracy of a large company with a mere double-spend on equipment. It would be cheap at 10x that price.

The whole point of the startup culture is that they can do things better than a large company.

And, quite often, they can. But not always.

A semiconductor plant, for example, is not a startup thing because the capital cost is so gigantic.

However, most fields are not that bad. Even bio equipment just isn't that expensive relative to the cost of the people to use that equipment.

The bigger problem, right now, is that investors don't want to fund anything which requires more than 18 months before flameout/unicorn. That blocks startups that have a 5+ year horizon.

Re: What caused all the supply chain bottlenecks?

#322
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...

This is from 18 months ago saying covid "could mean" "up to 260 million" face a food crisis.

I'm very confident the real numbers of starved people since then is vastly lower.

Re: What caused all the supply chain bottlenecks?

#323

Earlier quoted context omitted.

> 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 require…

> 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.

We don't live in a centrally planned (by a single person) economy where companies are run by simple automation.

Companies are run by people. These people notice when their suppliers are disrupted. They notice when they can't refill their buffers even before the buffers run out. And suppliers of raw materials certainly notice raw material shortages.

We didn't find out about the chip shortage from the article you linked when Toyota's buffer of chips ran out.

Re: What caused all the supply chain bottlenecks?

#324

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…

I was thinking this thread was basically explaining kanban

Re: What caused all the supply chain bottlenecks?

#325

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…

True, but what isn't on the table is producing locally even if it doesn't optimize to the penny instead of shipping crap halfway around the world to save half a cent.

This has the advantage that you already have industries that have capacity that can scale up. You have people trained who can train others. You already have equipment and facilities to which you can add to to break a bottleneck.

Basically, vertical integration at the country level.

Of course, this is the CEO of a shipping startup so that solution isn't on his plate of possibilities.

Re: What caused all the supply chain bottlenecks?

#326

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…

Yep, the capital owning class just doesn't care if their businesses go into shock because they already have their cash in hand. They'll never go back to pre-ROE days because they'd have to live with less money and worse less control. While they still have personal reserves in the billions they can decide the fate of their ventures but if say 20% of their current cash was on the balance sheets of corporations with boa…

The endgame isn’t going to a fix, it’s defeat.

Newer, smarter Asian companies will displace stupid old American ones, just as the Americans crushed the Europeans.

Re: What caused all the supply chain bottlenecks?

#327
post #256

This is like a Rorschach test. There is truly something for everyone. What caused all the supply chains bottlenecks? Hard Left: "It's the fault of *capitalism*!" Hard Right: "It's the fault of *unions*!" Soft Left: "Truckers don't have a living wage!" Soft Right: "We stopped producing because of lockdowns!" Greens: "It's *climate change* disrupting the economy!" Libertarians: "*Government mismanagement of ports!*" YI…

Staying at home and collecting unemployment.

Yes! I have definitely heard that one, too. I will update the list.

Re: What caused all the supply chain bottlenecks?

#328
post #319

Earlier quoted context omitted.

> Bezos does not have his cash in hand, for the most part. To the extent that he does have cash in hand, he has already paid taxes on that cash. What a lot of high wealthy individuals are doing is using their portfolios as collateral against lines of credit. The LOCs give them cash to fund their lifestyle, and they don't have to liquidate their portfolios and take the capital gains charges (at least in the short-term…

Don't they have to payback the loans at some point? And at that point do they not liquidate some assets to do so and pay taxes on that? (Serious question.)

> Don't they have to payback the loans at some point?

LOCs are often open-ended, so as long as they're at minimum paying the interest, the lender doesn't care. Presumably it will be cleared up eventually on death with the estate.

Re: What caused all the supply chain bottlenecks?

#329
post #269

Earlier quoted context omitted.

>it's still in his best interest to ensure that the economy doesn't crash Technically, yeah! Functionally, though, if the Even Greater Depression arrived tomorrow? He'd still be the richest man alive, and probably even more powerful than he already is right now thanks to how Amazon and AWS would get to take over more failing social institutions. Sure, a falling tide lowers all boats, but Bezos will still comfortably…

None of this is the point, though. The point is that Amazon wouldn't have achieved what it has if Bezos was forced to slowly divest control of his company over the last two decades. Bezos does not have his cash in hand, for the most part. To the extent that he does have cash in hand, he has already paid taxes on that cash. To the extent that he has not paid taxes on his wealth, he is fully incentivized by the share p…

I’m willing to bet he has more cash on hand than we will make in our entire lifetimes… what’s the point of arguing how much it is? the point is that he has so much money that nothing really matters.

Re: What caused all the supply chain bottlenecks?

#330
post #181

Earlier quoted context omitted.

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

What exactly is the "RAM" if not inventory?

Production and logistics capacity. If you run a factory at 100% efficiency, anytime >100% throughput is necessary you get backlogged. If you have ~15% headroom as a GOAL, you can weather a shock without any downstream impact.

In the case of the Port of LA shipping containers, optimizing lot storage so that you always have exactly enough space (100% efficiency) breaks down as soon as that space requirement jumps to 110%.

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