It’s happened to all of us. We go to the store to get something we need and the item is out of stock. It doesn’t matter if it’s bacon, vitamins, or, God forbid, toilet paper. It seems like everything is in short supply.
So, we all hear about problems with the “supply chain”, but I’ve never seen a news report spend a minute on describing the complexities of the supply chain. Most news stories focus on cargo ships waiting to unload their cargoes at a west coast port, but that’s an oversimplification of the problem.
In a recent article James Rickards gave a simple but illustrative example of the supply chain with a bakery baking bread:
If you go to the store to buy a loaf of bread, you know that the bread did not mystically appear on the shelf. It was delivered by a local bakery, put on the shelf by a clerk, you carried it home and served it with dinner. That’s a succinct description of a supply chain – from baker to store to home.
Yet that description barely scratches the surface. What about the truck driver who delivered the bread from the bakery to the store? Where did the bakery get the flour, yeast and water needed to make the bread? What about the ovens used to bake the bread? When the bread was baked, it was put in clear or paper wrappers of some sort. Where did those come from?
Mr. Rickards goes on to discuss the complexity of each component of the production of a loaf of bread, but you get the idea.
So how did we allow the supply chain to break? Why is the supply chain so fragile?
One reason is that it’s all Japan’s fault. Sort of.
In the 1980s Japan’s industry pioneered “lean manufacturing” that uses “just in time” inventory management. The idea is that the parts you need to build something are delivered precisely when they’re needed. So, when Toyota wants to build 1,000 cars today, 5,000 tires are delivered this morning. At the same time Ford or GM might have had a 30 day’s supply, or 150,000 tires sitting in a warehouse. That costs a lot of money for the tires and their storage.
And, it’s all very efficient, assuming that the tires arrive on time every morning.
But, when the tires are sitting on a ship in Long Beach Harbor, the production of cars stops.
And that’s a big disadvantage of very efficient manufacturing – it makes the supply chain very fragile. Unfortunately for our current situation, since the 1980s many manufacturers have adopted lean manufacturing.
We’re seeing shortages now but not just because of supply chain problems. Some other reasons are:
Pandemic hoarding. Yes, toilet paper was out of stock because we each needed 200 rolls in our closet. Me included. (I also have a few gallons of Clorox on the shelf. *Blush*)
Inflation. When you think that the price of something is going to go up, you don’t wait to buy it, you get it now. When everyone does the same thing, we can have shortages.
Covid – Sickness. If you’re sick with Delta or Omicron you’re not going to work.
Covid – Lockdowns and quarantines. Workers who are barred from going to work can’t drive trucks and stock shelves.
Covid – Mandates. Some workers who refuse vaccines are being terminated. This is one reason for thousands of airline flights being cancelled and hospitals curtailing services.
So, what can we do about this? As individuals, nothing really. What each of us can do is get used to making do with less at least until things return to normal. But, maybe getting back to normal means we’ve gotten used to making do with less? That might be a good thing?
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Christmas Isn’t Just for Little Kids, It’s for Big Kids Too!
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Now THAT’s Cold!
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I appreciate the humor but can't help mentioning that donkeys are sweet and loving and unfortunately one of the most abused animals on earth. They are truly a creature of burden and when unable to do the impossible painful work demanded of them, they are left to die.