A question from Rob Fisher:
My conjecture is that supply chains, even “just in time” ones, are in fact robust, on account of the self interest of the people involved in them, and the price signals of the market and so on. The appearance of fragility comes from somewhere else, possibly the mind of the observer lacking all the information.
Tim, do you see what I’m getting at? I have a feeling you would have something to say about this, possibly involving exotic metals.
Without running off into weird metals.
The global experts in running supply chains are the people who run supply chains. They have more information than anyone else about who produces at what price and quality etc. That is, after all, what they do for their living. That they do it for their living means they also have the correct incentives. Their wages/profits depend upon the chain being supplied. They have, as it were, skin in the game.
The global experts are committed to the system. Can’t see that we’re going to get a much better system than that. Moving to any other system of the State or bureaucracy would seem to violate one of those two principles, knowledge and commitment.
As to JIT a lot of people misunderstand this. It’s a matter of scheduling more than it is of not having stock in the supply chain.
Think back to coal going down a canal. Takes 2 weeks for a barge to get somewhere, the somewhere uses a barge a day. Do they need to have 14 barge’s worth in storage at the end of the canal to cover delivery time? Nope, they need the canal to be loaded with one barge a day of coal at the start so there’s one barge a day arriving at the end. JIT is that second. It’s not that the order is placed and the supply chain is empty then it’s delivered. It’s that the supply, chain is tuned to deliver when it is needed. There’s much the same forward commitment to take stock etc. It’s just instead of delivering my 14 barge’s worth, please deliver one a day under the same contract.