It’s the perfect asymmetric attack.
There is insufficient concern about how fragile our industrial civilization is, at least among the people in a position to do something about it.
9 thoughts on “The Supply Chain”
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It’s the perfect asymmetric attack.
There is insufficient concern about how fragile our industrial civilization is, at least among the people in a position to do something about it.
Comments are closed.
As I’ve been saying for decades, the myopic free-trade fixation on efficiency above all else would not end well, because it cannot end well.
Globalization is, and always has been, a disaster in the making; it creates a massively fragile system, with a fringe benefit of empowering dangerous regimes (such as China), while at the same time gutting our own industrial base.
Fragile, hypercomplex systems, especially those with no slack capacity (just-in-time supply chains instead of inventory) are by their nature unreliable and prone to disruption, including intentional disruption.
We are now reaping the results of this failed system. I’m rooting for the disruptions to continue, in the hope that, just maybe, we’ll come to realize what a mass we’ve made, and actually do something to treat the problem rather than merely its symptoms.
Perhaps, just maybe, we’ll also realize that things connected to the Internet can’t be secure, and there’s no good reason (and plenty of downside) to a security system in Indiana, a factory in China, the control system of a nuclear power plant in Arizona, and voting machines in Georgia, all being connected to each other.
Globalization and Just in Time Inventory work great in a perfect world. Unfortunately, perfect worlds only exist in academic papers. In the real world, there are countless things that can disrupt the pipeline of goods needed to keep the supply chain functioning. Weather, such as storms at sea or blizzards, are a regular hindrance. Cargo ships can and do sink, catch fire, drop containers, or get delayed by loading problems at ports or wayward ships blocking the Suez Canal. Trains and trucks have accidents on a fairly regular basis. Then there are the intentional slowdowns, such as strikes and work stoppages, that can cause critical parts to stop flowing. Yep, globalization and JIT inventory are great, until they aren’t. And for most of this year and for the foreseeable future, they aren’t.
Just in Time started in factory production lines IIRC, and it works quite well when everything is under the same roof. However, the more distance gets involved the more “buffer ” you need to avoid disruption.
Yes, when your factory is depending on parts arriving Just In Time from halfway around the world, or even across the country, you’d better be ready to have to implement workarounds or stop production frequently. I read a couple months ago that Ford had to suspend production of their top selling F-150 pickups due to the semiconductor shortage. They continued building them and parked them awaiting the parts. As the parts arrived, they’d be fitted to the trucks and sent to the dealerships for sale. From what I read, they physically ran out of space to park any more incomplete trucks. So, they idled the factory and likely put thousands of people out of work, both at their factory and at the many parts suppliers they use for the F-150. Turning on production again will likely be a slow and expensive process when the parts become available. I can only imagine how much this is costing Ford in lost sales.
Interestingly, Henry Ford was the inventor of Just In Time, way back when he set up the first automotive assembly lines. It was a great innovation, and it has been reinvented several times since.
There is one problem with getting rid of Just In Time in eleven states: inventory taxes. They’re like personal property taxes (and in fact are called included in a state’s Business Tangible Personal Property Tax), and are paid whenever a company has inventory on hand – both finished goods and raw materials, it doesn’t matter.
In the U.S. this is a problem, because the states that have inventory taxes are also the most productive ones, e.g. Texas, Kentucky, Arkansas, Virginia, West Virginia, etc. As long as they are in place, inventory taxes will always incentivize Just In Time. There has been a movement to get rid of them, but like any long-standing tax or regulation, the prospects are dim.
That’s the Goal as I read it.
A distributed supply chain with multiple sources also helps when you need raw material. The mistake isn’t so much globalization as the specialization of national industries and f’n California banning anything it decided could be done elsewhere.
“The UK’s new legislation giving government greater powers to intervene in mergers and acquisitions on national security grounds is long overdue and brings it into line with other Western countries. ”
Uhhh…
Our government and political class gives away our resources and technological advantages in exchange for personal enrichment. Not sure how the UK becoming more like us helps things. I’m sure more than a few of the contributors at the link take advantage of this condition.
There’s a strong argument that Frederick Winslow Taylor, creator of “scientific management,” along with Marx and Freud, one of the main architects of the 20th century, and thus of the 21st century catastrophe in progress, is one of the twin enablers of Marxism’s expansion (noting that it amounted to nothing until Freud filled our heads with psychobabble and Taylor turned workers into pissed-off widgets).
Global JIT violates Scott’s Dictum: “The more they overthink the plumbing, the easier it is to stop up the drain.”
Clearly a lesson that needs to be relearned every couple hundred years.