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In my experience, it's not that companies are choosing any one strategy over another. It's more that companies have no idea what their supply chain actually lo

In my experience, it's not that companies are choosing any one strategy over another. It's more that companies have no idea what their supply chain actually looks like. Only that the widgets show up at their loading dock every week, and that the shipments have always been reliable in the past, so that there's no reason to look any further. There are often strong disincentives, as well. Nike, for example, got themselves into trouble when parts of their supply chain became public. Many more companies regard their unique supply chain as a competitive advantage. So, even if you should take up the time, effort, and expense to research your own supply chain, there's a high likelihood that your upstream vendors will have no interest in sharing their suppliers with you. There are exceptions to this. Reportedly Apple has excellent supply chain visibility, but they've achieved it at great effort. (I'm by no means an expert, but I used to work for sourcemap.com, an MIT startup based around the idea of understanding supply chains end-to-end.)

moufestaphio 7y ago
My current position is involved in Supply Chain, and this hits the nail on the head. There are so many different departments with fragmented knowledge of the supply chain that isn't shared or sometimes even documented. One of the senior people trying to fix this specifically mentioned Walmart as an example of having their supply chain being a competitive advantage because they focused on it so much. I think Apple was also one of the ones we discussed.
- jcims 7y ago
  WalMart turned their supply chain into a competitive advantage 30-40 years ago. I saw it as an employee first, their inventory control in the store was ridiculous back in the 80's. Then I saw it again working with an EDI shop (Sterling Commerce) in the 90's. Everything was electronic. We'd get these little mom and pop shops calling in trying to get their bisync modems working so they could upload their ANSI X12 810's. The only reason there's any question who's the richest person in the world is that Sam Walton is dead.
  - implements 7y ago
    Sterling Commerce - that’s a name I haven’t heard in a •long• time. Do you by any chance remember a company called “EDES” (Electronic Data Exchange Service)?
    - jcims 7y ago
      There's a tickle in a neuron but it could be self-induced. What was the relationship?
      - implements 7y ago
        They bought EDES in 1998 - it was a company I’d done a bit of contract work for. (Trivia) EDES was one of the few users of RPL (RapidGen Programming Language) - Decision Table based, and running on PDP11s and later MicroVaxs. https://www.cbronline.com/news/sterling_commerce_buys_into_uk_toy_market https://www.cbronline.com/news/sterling_commerce_buys_into_u...
        jcims 7y ago
        Hmmm I was there in 98, probably just a hole in my memory.
jcims 7y ago
This is it 100%. I work at a major financial institution and we invest ridiculous amounts of money, effort and, frankly, delay, in understanding our supply chain, its security posture and risk management model. It's a unbelievably gargantuan effort and if it weren't for the scary shit that we find all the time one could easily argue it's a waste.
- victor9000 7y ago
  What problems have you encountered that others should avoid?
  - jcims 7y ago
    They run the gamut. Lack of a viable risk management program, lack of resiliency planning and testing, poor operational and change management controls, poor visibility and response planning for security events, poor SDLC security, etc. etc. The requirements vary based on our exposure.
  - Spooky23 7y ago
    Over the years, I have run into: - Counterfeit components, like memory out of spec that creates scaled failures. - Fake products from the channel. - Fundamental mistruths with regard to how services are delivered. - Poor operational practices for maintaining SLA, especially for off-shored services. Those ops folks will move mountains to meet the minimum standard of "up", but will allow problems to fester. - Fraud. Fake on-site employees sending work back to a boiler room with people actually doing the work. - Fraud. Named users actually being fake people sharing a credential. In one case, a colleague in a manufacturing case discovered this when he accidentally received a link to an open video stream of a MFA token. - Fraud. Stuffing fake or inferior products into orders. Example: Order new laptops, find a bunch of refurbs in the pallets. Basically, people suck and if you primarily make purchasing decisions based on price, and you care about what you are buying, you need to treat the counter-party as a potentially hostile actor and assume that you are going to be ripped off.
    - 6510 7y ago
bilbo0s 7y ago
>but they've achieved it at great effort. And enormous expense. You shouldn't have to have Apple money to establish visibility into, and security of, your supply chain. I mean, do you really want to be down in the weeds trying to make sure the coltan isn't essentially coming from Rwandan warlords? Apple can afford that, most people can't.
- eru 7y ago
  Just adopt the opposite point of view: You could, by default, have lots of visibility in your supply chain. Or you could get a substantial discount in return for giving up on that visibility. You are arguing that the discount should be smaller?
dv_dt 7y ago
They have a complete idea, its just that the globalized option is cheaper, even fractions of pennies cheaper, and is directly measured in the profit margin, while the risk, if it shows up at all, is buried in the footnote of a 10-Q or annual report. Ideas like regionalization and flexible manufacturing are great ideas, in most cases, the capital machinery of factories are relatively easy to replicate and setup (harder than software, but much easier now than any time in the past). However, the economic and accounting system needs to balance out the global employee wage differentials for it to gain any traction. Tariffs have been hated on economically, in part because the analysis values the generic profit creation over the risk; but it seems like one way to balance wage differentials to encourage de-risking our supply chain. I'm sure there are other maybe better methods?
- epicureanideal 7y ago
  They could introduce some new GAAP rules like... Add 10% of the value of all inventory sourced outside North America as a "risk liability". Same for 10% of yearly labor that's outsourced. Basically find ways to make short term thinking visible in their financial reports, since that's what's measured and rewarded.
  - Havoc 7y ago
    Not really an accounting issue & messing with those numbers to highlight a risk is just asking for trouble. Companies are required to disclose significant risks, but the quality of that disclosure...varies.
    - epicureanideal 7y ago
      I suppose this is a useful way to use tariffs. Make production abroad slightly more expensive, or significantly more expensive for vital goods.
  - dredmorbius 7y ago
    Base those premiums on verified actuarially based underwriting risk and you might be on to something.
r00fus 7y ago
Is it possible some legislation requiring resilience and local-sourcing could be possible in this climate? - esp. given the political antipathy to China these days.
- mistermann 7y ago
  I sure get the feel that it would be, but I hope we get moving on that ASAP before this is over, because I suspect minds have only been temporarily opened on this matter. Before too long I suspect our old heuristics will reassert their dominance over logic on topics that are in any way associated with the identity of the person. I am going to bookmark this thread in anticipation of this phenomenon. "Nobody could have foreseen what would happen when the world’s second-largest economy went offline and completely shut down external logistics connections." Exactly what they said about the housing bubble. Honestly, how many people on HN and elsewhere couldn't anticipate this? I think the main thing that has caught everyone by surprise is just how comically unprepared we are for this. And the overwhelming sentiment I've been getting from the memeplex is that this situation is entirely the fault of Trump, when he fired Obama's pandemic team. Not only is this not actually technically true, the idea or insinuation (dog-whistling) that the extension of that team would have mitigated this whole thing seems to be quite unlikely, to put it mildly. Oh yes, of course having this team in place would have improved things - but by how much, and under what counter-factual scenarios? These are the discussions we need to have, but I don't think Western culture as it is is capable of having them. We need to wake up and realize the human ego is the root of all of these problems.
  - lifeisstillgood 7y ago
    This is arguing over whether the iceberg sank the Titanic or the decision to remove bulkheads to make room for the grand ballroom. It is of course both. Global supply chains and JIT delivery have made us more fragile. But China reacted well - locked down a region of 60 M people - then sent in the resources we of 1.5 BN to stop the spread to the rest of the country. Now they are basically hanging on till a vacccine. USA pandemic teams probably had similar plans - shutdown California for example - in other words steering away from the worst of the icebergs. Is China's strategy "best"? Hard call to make - especially now. But it beats many many alternatives.
droopyEyelids 7y ago
My family is in manufacturing and everyone is acutely aware of their supply chain, and there are whole departments in the companies dedicated to sourcing and testing it all. Supply chain management is like 50%+ of all manufacturing industry. I think you must be responding to the idea of like a hospital not knowing where their masks come from- and I don't think thats the focus of the article.
- gowld 7y ago
  Does your company monitor its entire supply chain, or its supply links?
- PeterisP 7y ago
  If your supplier's supplier would change their supplier of something, is that something your company would know, or are they at liberty to source their materials and parts wherever and however they want and not tell anyone? Carefully sourcing parts is one thing, tracking the whole supply chain of where your suppliers get their materials is another.
j-c-hewitt 7y ago
There are regulatory and IP issues to consider as well. Redundancy is not necessarily as straightforward as it seems.
gowld 7y ago
It's called the invisible hand the free market for good reason.
spiderjerusalem 7y ago
> based around the idea of understanding supply chains end-to-end if you know more companies / projects in this area, I would love to know. It's of course wiser and easier to do b2b in this space, but there's also the dual problem from the consumer side of getting to know the supply chain. It would be so great to have a portal where I can scan a barcode and get to know the whole chain of production.
hinkley 7y ago
Before he was CEO, Tim Cook was handling logistics for Apple, wasn't he? I haven't been at many companies where a customer paid us money specifically to build up capacity for them first. Most of the time I've had to ramp up, we had to pay for it out of investment dollars or scraped out of contracts specifically for deliverables. Even when we special-built a feature for a customer, we still had to find a way to generalize it for others to turn a profit on it, and that was out of pocket. Apple has apparently paid a number of manufactures to get good at something in exchange for a short lockup period and a permanent discount on orders. Which I think is why when Intel tried to make their first direct Macbook competitor, it turned out their margins were razor thin compared to Apple's.
downerending 7y ago
Arguably a benefit of substantial tariffs is that it gets that message through (i.e., your supply chain may not be nearly as reliable as you think).
charwalker 7y ago
My dad used to work for a big tech OEM and retired a few years back. He had years of supply chain flows, contacts, locations, and more for his old company in notes, his head, and Visio and was hired through layoffs for that knowledge. I think in like 2006 he was picked up by a manager who had heard him speak up in a meeting years before to explain a step in a chain and knew he knew what the company was able to do. He could jump into the flow of parts and information for a specific printer model from 10 years ago. He knew the reasons for each steps like import tax avoidance, cost/benefit analysis of using one vendor/shipper/etc, or even that they used to have a specific engineer at that one factory who was amazing at QA and tolerance checking or something like that. When teams were behind due to supply chain issues, he would jump in to analyze their process. Sometimes that meant combining it with ongoing flows like "This factory here makes a part like that for product X, I'll get you a sample so you can adapt it into your product to rework." He had immense company value and history committed to memory that he tried to pass before leaving as teams moved to India or China. But I doubt anyone at a decision making level was aware.
- eru 7y ago
  Thanks for the write-up! > He knew the reasons for each steps like import tax avoidance, cost/benefit analysis of using one vendor/shipper/etc, or even that they used to have a specific engineer at that one factory who was amazing at QA and tolerance checking or something like that. Excellent example. Some of those you wouldn't be allowed to document in writing, even if you wanted to.
guerrilla 7y ago
> more that companies have no idea what their supply chain actually looks like. Except Walmart
FooHentai 7y ago
>Only that the widgets show up at their loading dock every week, and that the shipments have always been reliable in the past, so that there's no reason to look any further. Just want to add that this same story is playing out at the individual level right now, as well. Milk comes from supermarket shelves, not cows.

moufestaphio 7y ago

My current position is involved in Supply Chain, and this hits the nail on the head. There are so many different departments with fragmented knowledge of the supply chain that isn't shared or sometimes even documented. One of the senior people trying to fix this specifically mentioned Walmart as an example of having their supply chain being a competitive advantage because they focused on it so much. I think Apple was also one of the ones we discussed.

jcims 7y ago
WalMart turned their supply chain into a competitive advantage 30-40 years ago. I saw it as an employee first, their inventory control in the store was ridiculous back in the 80's. Then I saw it again working with an EDI shop (Sterling Commerce) in the 90's. Everything was electronic. We'd get these little mom and pop shops calling in trying to get their bisync modems working so they could upload their ANSI X12 810's. The only reason there's any question who's the richest person in the world is that Sam Walton is dead.
- implements 7y ago
  Sterling Commerce - that’s a name I haven’t heard in a •long• time. Do you by any chance remember a company called “EDES” (Electronic Data Exchange Service)?
  - jcims 7y ago
    There's a tickle in a neuron but it could be self-induced. What was the relationship?
    - implements 7y ago
      They bought EDES in 1998 - it was a company I’d done a bit of contract work for. (Trivia) EDES was one of the few users of RPL (RapidGen Programming Language) - Decision Table based, and running on PDP11s and later MicroVaxs. https://www.cbronline.com/news/sterling_commerce_buys_into_uk_toy_market https://www.cbronline.com/news/sterling_commerce_buys_into_u...
      - jcims 7y ago
        Hmmm I was there in 98, probably just a hole in my memory.

jcims 7y ago

This is it 100%. I work at a major financial institution and we invest ridiculous amounts of money, effort and, frankly, delay, in understanding our supply chain, its security posture and risk management model. It's a unbelievably gargantuan effort and if it weren't for the scary shit that we find all the time one could easily argue it's a waste.

victor9000 7y ago
What problems have you encountered that others should avoid?
- jcims 7y ago
  They run the gamut. Lack of a viable risk management program, lack of resiliency planning and testing, poor operational and change management controls, poor visibility and response planning for security events, poor SDLC security, etc. etc. The requirements vary based on our exposure.
- Spooky23 7y ago
  Over the years, I have run into: - Counterfeit components, like memory out of spec that creates scaled failures. - Fake products from the channel. - Fundamental mistruths with regard to how services are delivered. - Poor operational practices for maintaining SLA, especially for off-shored services. Those ops folks will move mountains to meet the minimum standard of "up", but will allow problems to fester. - Fraud. Fake on-site employees sending work back to a boiler room with people actually doing the work. - Fraud. Named users actually being fake people sharing a credential. In one case, a colleague in a manufacturing case discovered this when he accidentally received a link to an open video stream of a MFA token. - Fraud. Stuffing fake or inferior products into orders. Example: Order new laptops, find a bunch of refurbs in the pallets. Basically, people suck and if you primarily make purchasing decisions based on price, and you care about what you are buying, you need to treat the counter-party as a potentially hostile actor and assume that you are going to be ripped off.
  - 6510 7y ago

bilbo0s 7y ago

>but they've achieved it at great effort. And enormous expense. You shouldn't have to have Apple money to establish visibility into, and security of, your supply chain. I mean, do you really want to be down in the weeds trying to make sure the coltan isn't essentially coming from Rwandan warlords? Apple can afford that, most people can't.

eru 7y ago
Just adopt the opposite point of view: You could, by default, have lots of visibility in your supply chain. Or you could get a substantial discount in return for giving up on that visibility. You are arguing that the discount should be smaller?

dv_dt 7y ago

They have a complete idea, its just that the globalized option is cheaper, even fractions of pennies cheaper, and is directly measured in the profit margin, while the risk, if it shows up at all, is buried in the footnote of a 10-Q or annual report. Ideas like regionalization and flexible manufacturing are great ideas, in most cases, the capital machinery of factories are relatively easy to replicate and setup (harder than software, but much easier now than any time in the past). However, the economic and accounting system needs to balance out the global employee wage differentials for it to gain any traction. Tariffs have been hated on economically, in part because the analysis values the generic profit creation over the risk; but it seems like one way to balance wage differentials to encourage de-risking our supply chain. I'm sure there are other maybe better methods?

epicureanideal 7y ago
They could introduce some new GAAP rules like... Add 10% of the value of all inventory sourced outside North America as a "risk liability". Same for 10% of yearly labor that's outsourced. Basically find ways to make short term thinking visible in their financial reports, since that's what's measured and rewarded.
- Havoc 7y ago
  Not really an accounting issue & messing with those numbers to highlight a risk is just asking for trouble. Companies are required to disclose significant risks, but the quality of that disclosure...varies.
  - epicureanideal 7y ago
    I suppose this is a useful way to use tariffs. Make production abroad slightly more expensive, or significantly more expensive for vital goods.
- dredmorbius 7y ago
  Base those premiums on verified actuarially based underwriting risk and you might be on to something.

r00fus 7y ago

Is it possible some legislation requiring resilience and local-sourcing could be possible in this climate? - esp. given the political antipathy to China these days.

mistermann 7y ago
I sure get the feel that it would be, but I hope we get moving on that ASAP before this is over, because I suspect minds have only been temporarily opened on this matter. Before too long I suspect our old heuristics will reassert their dominance over logic on topics that are in any way associated with the identity of the person. I am going to bookmark this thread in anticipation of this phenomenon. "Nobody could have foreseen what would happen when the world’s second-largest economy went offline and completely shut down external logistics connections." Exactly what they said about the housing bubble. Honestly, how many people on HN and elsewhere couldn't anticipate this? I think the main thing that has caught everyone by surprise is just how comically unprepared we are for this. And the overwhelming sentiment I've been getting from the memeplex is that this situation is entirely the fault of Trump, when he fired Obama's pandemic team. Not only is this not actually technically true, the idea or insinuation (dog-whistling) that the extension of that team would have mitigated this whole thing seems to be quite unlikely, to put it mildly. Oh yes, of course having this team in place would have improved things - but by how much, and under what counter-factual scenarios? These are the discussions we need to have, but I don't think Western culture as it is is capable of having them. We need to wake up and realize the human ego is the root of all of these problems.
- lifeisstillgood 7y ago
  This is arguing over whether the iceberg sank the Titanic or the decision to remove bulkheads to make room for the grand ballroom. It is of course both. Global supply chains and JIT delivery have made us more fragile. But China reacted well - locked down a region of 60 M people - then sent in the resources we of 1.5 BN to stop the spread to the rest of the country. Now they are basically hanging on till a vacccine. USA pandemic teams probably had similar plans - shutdown California for example - in other words steering away from the worst of the icebergs. Is China's strategy "best"? Hard call to make - especially now. But it beats many many alternatives.

droopyEyelids 7y ago

My family is in manufacturing and everyone is acutely aware of their supply chain, and there are whole departments in the companies dedicated to sourcing and testing it all. Supply chain management is like 50%+ of all manufacturing industry. I think you must be responding to the idea of like a hospital not knowing where their masks come from- and I don't think thats the focus of the article.

gowld 7y ago
Does your company monitor its entire supply chain, or its supply links?
PeterisP 7y ago
If your supplier's supplier would change their supplier of something, is that something your company would know, or are they at liberty to source their materials and parts wherever and however they want and not tell anyone? Carefully sourcing parts is one thing, tracking the whole supply chain of where your suppliers get their materials is another.

j-c-hewitt 7y ago

There are regulatory and IP issues to consider as well. Redundancy is not necessarily as straightforward as it seems.

gowld 7y ago

It's called the invisible hand the free market for good reason.

spiderjerusalem 7y ago

> based around the idea of understanding supply chains end-to-end if you know more companies / projects in this area, I would love to know. It's of course wiser and easier to do b2b in this space, but there's also the dual problem from the consumer side of getting to know the supply chain. It would be so great to have a portal where I can scan a barcode and get to know the whole chain of production.

hinkley 7y ago

Before he was CEO, Tim Cook was handling logistics for Apple, wasn't he? I haven't been at many companies where a customer paid us money specifically to build up capacity for them first. Most of the time I've had to ramp up, we had to pay for it out of investment dollars or scraped out of contracts specifically for deliverables. Even when we special-built a feature for a customer, we still had to find a way to generalize it for others to turn a profit on it, and that was out of pocket. Apple has apparently paid a number of manufactures to get good at something in exchange for a short lockup period and a permanent discount on orders. Which I think is why when Intel tried to make their first direct Macbook competitor, it turned out their margins were razor thin compared to Apple's.

downerending 7y ago

Arguably a benefit of substantial tariffs is that it gets that message through (i.e., your supply chain may not be nearly as reliable as you think).

charwalker 7y ago

My dad used to work for a big tech OEM and retired a few years back. He had years of supply chain flows, contacts, locations, and more for his old company in notes, his head, and Visio and was hired through layoffs for that knowledge. I think in like 2006 he was picked up by a manager who had heard him speak up in a meeting years before to explain a step in a chain and knew he knew what the company was able to do. He could jump into the flow of parts and information for a specific printer model from 10 years ago. He knew the reasons for each steps like import tax avoidance, cost/benefit analysis of using one vendor/shipper/etc, or even that they used to have a specific engineer at that one factory who was amazing at QA and tolerance checking or something like that. When teams were behind due to supply chain issues, he would jump in to analyze their process. Sometimes that meant combining it with ongoing flows like "This factory here makes a part like that for product X, I'll get you a sample so you can adapt it into your product to rework." He had immense company value and history committed to memory that he tried to pass before leaving as teams moved to India or China. But I doubt anyone at a decision making level was aware.

eru 7y ago
Thanks for the write-up! > He knew the reasons for each steps like import tax avoidance, cost/benefit analysis of using one vendor/shipper/etc, or even that they used to have a specific engineer at that one factory who was amazing at QA and tolerance checking or something like that. Excellent example. Some of those you wouldn't be allowed to document in writing, even if you wanted to.

guerrilla 7y ago

> more that companies have no idea what their supply chain actually looks like. Except Walmart

FooHentai 7y ago

>Only that the widgets show up at their loading dock every week, and that the shipments have always been reliable in the past, so that there's no reason to look any further. Just want to add that this same story is playing out at the individual level right now, as well. Milk comes from supermarket shelves, not cows.