What caused all the supply chain bottlenecks? • Hacker News Board

Re: What caused all the supply chain bottlenecks?

#171

Post by modeless » Thu, Oct 28, 2021, 8:37 PM UTC

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…

> In the grand scheme of things, having a couple weeks of extra inventory on hand will not help you weather a 100 year storm.

That's not really what he's saying. It's not about a single company, it's about the whole economy. When every company is running JIT, a small temporary supply disruption anywhere can bubble and propagate through the whole chain, becoming a huge disaster. It's like a traffic jam; when a highway is running right at capacity it only takes one person hitting the brakes to turn the whole thing into a parking lot. Except it's worse than a linear highway because the economy has many backlinks where companies early in the chain rely on companies later in the chain, causing feedback loops. Whereas if there was slack in the system then the relatively small initial shock wouldn't propagate.

Re: What caused all the supply chain bottlenecks?

#172

Post by simonh » Thu, Oct 28, 2021, 8:38 PM UTC

SkittyDog wrote: post #123

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.

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…

Liquidity is a service customers pay for. It’s not clear to me that’s unproductive work. More efficiently allocating capital can absolutely improve productivity.

Some activities classed as renty can be economically beneficial. It’s not all pure usury, but activities that seek to increase rent revenue without increasing the value provided are a problem and that’s the ‘rent seeking’ part. I’ve no problem with fair value rents, but rents should be as low as the market can reasonably bear as excess rents are essentially a tax on production.

Re: What caused all the supply chain bottlenecks?

#173

Post by ryanmercer » Thu, Oct 28, 2021, 8:39 PM UTC

No.

My industry (international freight) is hemorrhaging people left and right in "the great resignation", COVID outbreaks at ports and facilities have been shutting specific facilities down on and off for almost 2 years, cargo containers aren't moving from ocean ports because there aren't any chassis to be had, Suez canal, weather, etc. etc. , so on and so forth.

Not "Return on Equity".

Re: What caused all the supply chain bottlenecks?

#174

Post by nojito » Thu, Oct 28, 2021, 8:39 PM UTC

This tweet storm is largely nonsense.

For example:

>The proper way to do accounting is Next in First Out (NIFO). This means you price your goods against the cost of replenishment.

NIFO isn't GAAP which is why it's largely pointless.

Re: What caused all the supply chain bottlenecks?

#175

Post by coolso » Thu, Oct 28, 2021, 8:39 PM UTC

hk1337 wrote: post #69

What's the deal with writing 20+ consecutive tweets instead of a blog post and tweeting the link to the blog post?

It’s hard to write 20 consecutive blog posts without seeming extremely pretentious. To the average Twitter user, massive Tweet chains means the person has something really important to say. The fact that they’re getting around the max tweet size makes things very rebellious, adding to that counterculture feel you only get on Twitter.. Add in the blue checkmark next to the name and yeah, I guess you could say Twitter users are pretty cool for using Twitter.

Re: What caused all the supply chain bottlenecks?

#176

Post by notatoad » Thu, Oct 28, 2021, 8:40 PM UTC

tgb wrote: post #21

Is "NIFO" really the right way to do accounting? If you sell the government one aircraft carrier, the cost of producing a second one will be much lower, so NIFO doesn't seem to fit there.

typically when you're selling aircraft carriers, you're selling it before you build it - the customer is paying you to make it, not paying you for the one you've already made. so the neither the economics or the accounting work the same way as acting as middleman for retail goods.

Re: What caused all the supply chain bottlenecks?

#177

Post by bhelkey » Thu, Oct 28, 2021, 8:40 PM UTC

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.

Re: What caused all the supply chain bottlenecks?

#178

Post by darawk » Thu, Oct 28, 2021, 8:41 PM UTC

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…

This is exactly right. It's about the term length of incentive alignment. Most founders have a long term reputational stake in the company they founded. Hired CEOs generally do not.

Re: What caused all the supply chain bottlenecks?

#179

Post by vanattab » Thu, Oct 28, 2021, 8:41 PM UTC

SkittyDog wrote: post #123

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.

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…

Unless you consider liquidity to be valuable? No?

Re: What caused all the supply chain bottlenecks?

#180

Post by legitster » Thu, Oct 28, 2021, 8:43 PM UTC

modeless wrote: post #171

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…

> In the grand scheme of things, having a couple weeks of extra inventory on hand will not help you weather a 100 year storm. That's not really what he's saying. It's not about a single company, it's about the whole economy. When every company is running JIT, a small temporary supply disruption anywhere can bubble and propagate through the whole chain, becoming a huge disaster. It's like a traffic jam; when a highway…

Supply chain issues were sooo much worse before JIT. Imagine one person taps the brakes, but every car weighs 100 tons.

When companies kept huge inventories, most of it was not useful to solve the supply chain issues that came up and often made it harder to respond to demand shocks.