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Farming is not a good comparison to manufacturing when it comes to overproduction. Food can be eaten or processed/preserved to be eaten later. Some foods have e

Farming is not a good comparison to manufacturing when it comes to overproduction. Food can be eaten or processed/preserved to be eaten later. Some foods have elastic demand but in general food doesn't since we all need to eat. With a lot of manufactured items demand is far more elastic and any given manufactured item isn't necessarily a substitute for any other. If Intel or AMD overproduces higher power desktop CPUs but there's market demand for low power laptop CPUs or ARM SoCs...the oversupply isn't going to spur any demand. Even if the oversupply depresses prices on those chips and desktop systems, they're not portable or phones so there's no useful substitution. Managing production volumes and forecasting demand is a huge aspect of modern manufacturing. Responding to demand quickly is one of the reasons manufacturing consolidates geographically. If a production line needs Component X at volume Y to keep moving, they can't wait weeks to get that supply. Too much surplus of components is also a problem because those all need to be stored until used. So the most economical configuration tends to be shipments of sub components feed almost directly into component manufacture lines that feed into packaging which feeds into shipment and distribution. That's difficult or impossible to accomplish if your supply chain is geographically dispersed. Slower and less dynamic supply chains aren't necessarily better at responding to crises since the production schedule of whatever will have been set well before the onset of whatever crisis. Responding to the crises then takes longer since extant component supplies likely don't match the crisis production needs. You can see this right now with industries the produce regulated/qualified products like medical supplies. A random factory can't just supply medical grade components. Without proper quality controls, sterilization, or batch tracking those items can end up more dangerous than not having them. Face masks that are ineffective due to manufacturing issues can get healthcare workers sick or spread disease to uninfected but at risk populations. I'm not saying JIT manufacturing is a panacea or that it's a good thing China has such a lions share of commodity goods manufacturing. But the solution to supply chain issues is more complicated than just building factories. Many companies are also simply unwilling to take a profit hit by diversifying their supply chains or moving to longer production cycles.

naasking 7y ago
I never said supply chains should be slower or less dynamic, I said they should be less centralized and thus more robust, and arguably critical goods manufacturing absolutely also need a domestic presence. This is completely obvious when you see how Hurricane Maria led to drug shortages because Puerto Rico was the sole produce of some critical drugs, or how China recently had to halt outgoing shipments and everyone else in the world started running out of masks and medical equipment. > But the solution to supply chain issues is more complicated than just building factories. Right, it's building factories in the right places, and ensuring they can tolerate disruptions. > Many companies are also simply unwilling to take a profit hit by diversifying their supply chains or moving to longer production cycles. Sure, just like banks and investment firms would be unwilling to have more robust debt ratios in order to improve their returns when all is well, if we didn't force them to maintain a less risky debt ratio in order to avoid catastrophes when all is not well. Manufacturing isn't meaningfully different in this respect, it's all about managing risk. Corporations should have more responsibilities to quantify and manage risks like this.
- giantrobot 7y ago
  > I never said supply chains should be slower or less dynamic, I said they should be less centralized and thus more robust, and arguably critical goods manufacturing absolutely also need a domestic presence. If manufacturing supply chains are more geographically dispersed they are automatically slower and less dynamic. They're not necessarily more robust either. As soon as the supply chain involves moving materials farther than a few hour drive by truck it becomes constrained by modes of transport that can't be easily dispersed (rail, air, water) or reprioritized. > Right, it's building factories in the right places, and ensuring they can tolerate disruptions. As demonstrated by...all of history since the beginning of the Industrial Revolution the right location for a factory today is not necessarily the right location for tomorrow. Relocating factories is expensive and difficult in the best circumstances. Every factory has a logistics train attached to it; not just equipment and trained workers but power requirements, waste disposal, physical siting requirements, and dozens of other factors. Some are easy to uproot and others are not. Again, I'm not arguing that China should just make everything and all factories should be located next to one another. I am saying that manufacturing is not like AWS. You can't just spin up new instances when you run out of capacity. You can't just move everything to a new factory closer to some resource or retool a factory for a totally different type of production with a deploy script. > Corporations should have more responsibilities to quantify and manage risks like this. Some do and several industries are regulated when it comes to sourcing. Defense contractors have all sorts of supply chain requirements. More industries can have supply chain security requirements but then end products will get more expensive. The added cost will get pushed to consumers. So you can optimize for the common case where pandemics are rare but manufacturing tends towards consolidation and low cost or you can optimize for robustness and everything manufactured carries with it the amortized cost of that more robust but expensive supply chain. Unless regulation forces all manufactured items to have a similarly robust supply chain and all manufacturers have the same burden, there's a competitive advantage to having a supply chain more susceptible to rare disruption but far less expensive.
  - naasking 7y ago
    > If manufacturing supply chains are more geographically dispersed they are automatically slower and less dynamic. You keep hammering on this geographic dispersal, but as far as I can see, no one is suggesting geographically dispersing or relocation supply chains, but are instead suggesting replicating supply chains in different geographical locations. You know, the standard approach to adding resiliency to literally any system. > Some do and several industries are regulated when it comes to sourcing. [...] there's a competitive advantage to having a supply chain more susceptible to rare disruption but far less expensive. Yes, and I'm suggesting that a more comprehensive legal approach where corporations providing critical goods or services should have to perform risk assessments and ensure a maximum tolerable risk. Everyone recognizes the competitive advantage of ignoring risk. I described it in my very first post to which you replied, and I then said improved risk management should be legislated.

naasking 7y ago

I never said supply chains should be slower or less dynamic, I said they should be less centralized and thus more robust, and arguably critical goods manufacturing absolutely also need a domestic presence. This is completely obvious when you see how Hurricane Maria led to drug shortages because Puerto Rico was the sole produce of some critical drugs, or how China recently had to halt outgoing shipments and everyone else in the world started running out of masks and medical equipment. > But the solution to supply chain issues is more complicated than just building factories. Right, it's building factories in the right places, and ensuring they can tolerate disruptions. > Many companies are also simply unwilling to take a profit hit by diversifying their supply chains or moving to longer production cycles. Sure, just like banks and investment firms would be unwilling to have more robust debt ratios in order to improve their returns when all is well, if we didn't force them to maintain a less risky debt ratio in order to avoid catastrophes when all is not well. Manufacturing isn't meaningfully different in this respect, it's all about managing risk. Corporations should have more responsibilities to quantify and manage risks like this.

giantrobot 7y ago
> I never said supply chains should be slower or less dynamic, I said they should be less centralized and thus more robust, and arguably critical goods manufacturing absolutely also need a domestic presence. If manufacturing supply chains are more geographically dispersed they are automatically slower and less dynamic. They're not necessarily more robust either. As soon as the supply chain involves moving materials farther than a few hour drive by truck it becomes constrained by modes of transport that can't be easily dispersed (rail, air, water) or reprioritized. > Right, it's building factories in the right places, and ensuring they can tolerate disruptions. As demonstrated by...all of history since the beginning of the Industrial Revolution the right location for a factory today is not necessarily the right location for tomorrow. Relocating factories is expensive and difficult in the best circumstances. Every factory has a logistics train attached to it; not just equipment and trained workers but power requirements, waste disposal, physical siting requirements, and dozens of other factors. Some are easy to uproot and others are not. Again, I'm not arguing that China should just make everything and all factories should be located next to one another. I am saying that manufacturing is not like AWS. You can't just spin up new instances when you run out of capacity. You can't just move everything to a new factory closer to some resource or retool a factory for a totally different type of production with a deploy script. > Corporations should have more responsibilities to quantify and manage risks like this. Some do and several industries are regulated when it comes to sourcing. Defense contractors have all sorts of supply chain requirements. More industries can have supply chain security requirements but then end products will get more expensive. The added cost will get pushed to consumers. So you can optimize for the common case where pandemics are rare but manufacturing tends towards consolidation and low cost or you can optimize for robustness and everything manufactured carries with it the amortized cost of that more robust but expensive supply chain. Unless regulation forces all manufactured items to have a similarly robust supply chain and all manufacturers have the same burden, there's a competitive advantage to having a supply chain more susceptible to rare disruption but far less expensive.
- naasking 7y ago
  > If manufacturing supply chains are more geographically dispersed they are automatically slower and less dynamic. You keep hammering on this geographic dispersal, but as far as I can see, no one is suggesting geographically dispersing or relocation supply chains, but are instead suggesting replicating supply chains in different geographical locations. You know, the standard approach to adding resiliency to literally any system. > Some do and several industries are regulated when it comes to sourcing. [...] there's a competitive advantage to having a supply chain more susceptible to rare disruption but far less expensive. Yes, and I'm suggesting that a more comprehensive legal approach where corporations providing critical goods or services should have to perform risk assessments and ensure a maximum tolerable risk. Everyone recognizes the competitive advantage of ignoring risk. I described it in my very first post to which you replied, and I then said improved risk management should be legislated.