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Smart business people will take this as a lesson about the dangers of zero-inventory manufacturing. Unscrupulous business people will continue running the busin

Smart business people will take this as a lesson about the dangers of zero-inventory manufacturing. Unscrupulous business people will continue running the business at high risk, knowing that they will probably be gone by the time a problem arises. Very smart leaders will use this as an opportunity to think about how to stop their companies from forgetting someone's involvement with a project or process during internal transfers or promotions; the leading route through which unscrupulous business people escape responsibility from secret risk.

unixhero 5y ago
This is also driven by investor expectations. Not "business people".
- whatshisface 5y ago
  A lot of this goes on inside departments where investors don't have any substantial insight.
  - unixhero 5y ago
    They do once a company gets additional funding and or when a company is bought. Investors tend to sit on the boards and yield significant power. You're not wrong, but I don't agree :)
    - whatshisface 5y ago
      I could be wrong but I don't imagine most of the manufacturing economy as being operated by companies that have due diligence done on them very often. Acquisitions happen but once a decade would be considered very often. Depending on the size of the company boards are often completely clueless about ground level details; I can hardly imagine someone on the board of P&G knowing a single thing about the supply chain risk of an individual SKU.
tablespoon 5y ago
> Unscrupulous business people will continue running the business at high risk, knowing that they will probably be gone by the time a problem arises. Or they can just price gouge. Heads I win, tails you lose.
- wyager 5y ago
  “Price gouging” is precisely the behavior that makes it economical to keep around extra stock in case of supply shocks. Negative public reaction to, and laws against, “price gouging” is the reason almost no business chooses to absorb the cost of keeping around an extra reserve.
  - tablespoon 5y ago
    > “Price gouging” is precisely the behavior that makes it economical to keep around extra stock in case of supply shocks. That idea doesn't hold a drop of water. If price gouging were legal, are you going to stockpile masks and sanitizer for a hundred years, so you're ready for the next gobal pandemic? Of course not: it's a dumb idea and you'd bankrupt yourself in storage fees and spoilage. Even an actual distributor wouldn't do that, given how short business time horizons are. What a smart price gouger would actually do is 1) make what they would have made otherwise, except collect higher profits, or 2) watch the news closely and rush out to try to buy up as much as they can before the general public acts, then sit outside the store they bought them from and scalp the goods at an exorbitant markup. Then they can satisfy their greed without wasting money on long term storage fees.
    - wyager 5y ago
      > If price gouging were legal, are you going to stockpile masks and sanitizer for a hundred years, so you're ready for the next gobal pandemic? You’re not understanding the play here. All you need to do slightly increase the amount you keep in stock and reduce JIT delivery dependence. This increases your capital expenses a few percent and only pays off if you can occasionally make big money by drawing on your extra stock. You also seem to misunderstand the law - it’s not illegal anywhere in the US (afaik) for random people to stockpile and resell goods. It doesn’t matter, because that’s not really a viable distribution strategy. It is illegal in many states for stores to suddenly raise prices, and stores are the institutions who would actually be equipped to absorb demand shocks.
OldHand2018 5y ago
> Smart business people will take this as a lesson about the dangers of zero-inventory manufacturing I disagree. Something entirely different is going on. Before the pandemic, onshoring of basic components started picking up (Trump's erratic behavior made planning really challenging) but the pandemic kicked it into overdrive (and Biden's policy plans will only increase it). I know people that are "Tier 3" manufactures - suppliers to the suppliers of the suppliers. They have more business than they can handle and are no longer willing to take on risk from sh*tty customers. JiT/0-inventory doesn't truly exist - somewhere you have to build enough stock to ensure smooth delivery during line changeovers, shift changes, machine repairs, and all the other completely normal minor "disruptions". It's invisible at the high levels of manufacturing because it's not on your loading dock. Smart business people will realize that supplier relationships are more important than ever. You have to screw them over less than the other guys or things get really choppy really fast.

unixhero 5y ago

This is also driven by investor expectations. Not "business people".

whatshisface 5y ago
A lot of this goes on inside departments where investors don't have any substantial insight.
- unixhero 5y ago
  They do once a company gets additional funding and or when a company is bought. Investors tend to sit on the boards and yield significant power. You're not wrong, but I don't agree :)
  - whatshisface 5y ago
    I could be wrong but I don't imagine most of the manufacturing economy as being operated by companies that have due diligence done on them very often. Acquisitions happen but once a decade would be considered very often. Depending on the size of the company boards are often completely clueless about ground level details; I can hardly imagine someone on the board of P&G knowing a single thing about the supply chain risk of an individual SKU.

tablespoon 5y ago

> Unscrupulous business people will continue running the business at high risk, knowing that they will probably be gone by the time a problem arises. Or they can just price gouge. Heads I win, tails you lose.

wyager 5y ago
“Price gouging” is precisely the behavior that makes it economical to keep around extra stock in case of supply shocks. Negative public reaction to, and laws against, “price gouging” is the reason almost no business chooses to absorb the cost of keeping around an extra reserve.
- tablespoon 5y ago
  > “Price gouging” is precisely the behavior that makes it economical to keep around extra stock in case of supply shocks. That idea doesn't hold a drop of water. If price gouging were legal, are you going to stockpile masks and sanitizer for a hundred years, so you're ready for the next gobal pandemic? Of course not: it's a dumb idea and you'd bankrupt yourself in storage fees and spoilage. Even an actual distributor wouldn't do that, given how short business time horizons are. What a smart price gouger would actually do is 1) make what they would have made otherwise, except collect higher profits, or 2) watch the news closely and rush out to try to buy up as much as they can before the general public acts, then sit outside the store they bought them from and scalp the goods at an exorbitant markup. Then they can satisfy their greed without wasting money on long term storage fees.
  - wyager 5y ago
    > If price gouging were legal, are you going to stockpile masks and sanitizer for a hundred years, so you're ready for the next gobal pandemic? You’re not understanding the play here. All you need to do slightly increase the amount you keep in stock and reduce JIT delivery dependence. This increases your capital expenses a few percent and only pays off if you can occasionally make big money by drawing on your extra stock. You also seem to misunderstand the law - it’s not illegal anywhere in the US (afaik) for random people to stockpile and resell goods. It doesn’t matter, because that’s not really a viable distribution strategy. It is illegal in many states for stores to suddenly raise prices, and stores are the institutions who would actually be equipped to absorb demand shocks.

OldHand2018 5y ago

> Smart business people will take this as a lesson about the dangers of zero-inventory manufacturing I disagree. Something entirely different is going on. Before the pandemic, onshoring of basic components started picking up (Trump's erratic behavior made planning really challenging) but the pandemic kicked it into overdrive (and Biden's policy plans will only increase it). I know people that are "Tier 3" manufactures - suppliers to the suppliers of the suppliers. They have more business than they can handle and are no longer willing to take on risk from sh*tty customers. JiT/0-inventory doesn't truly exist - somewhere you have to build enough stock to ensure smooth delivery during line changeovers, shift changes, machine repairs, and all the other completely normal minor "disruptions". It's invisible at the high levels of manufacturing because it's not on your loading dock. Smart business people will realize that supplier relationships are more important than ever. You have to screw them over less than the other guys or things get really choppy really fast.