What's Up With The Supply Chain?
We might have another example of the problem with conventional wisdom.
The other day I ran across a good Twitter thread about the supply chain issues; specifically, as it pertained to a particular port in Long Beach, Calif.
I encourage everyone to read the whole thread, in which problems are identified and solutions are suggested.
But one thing I can say about it is this: The supply chain issue in this instance might be identified through one factor, but how we got to this point is most likely because of multiple factors.
From local laws regarding how ports are operated, to the way we set up our supply chains across the globe, to recent events that affected shipping, there are plenty of factors we can blame for what's led to this situation.
Some would say these things are "all connected," but others might infer that a group of people got together and decided to design everything this way, as if there was a sinister plot to disrupt everything while they twirled their mustaches and laughed about all the money they got to stash away.
I think a better way to put things is that it's "all related," and by that, I mean there were different people making different decisions based on conventional wisdom -- and one such example would be the quest for "efficiency."
In other words, while there was no plot among these people to get together and cause problems, the people in question all thought in a similar manner -- that if they just do this one thing, a problem will be solved, only for the one thing to not work out the way these people thought it would.
Getting solutions into place to create the current issues with supply chains is fine, but it can't be the only thing we do. We need to identify what approaches we took that led to a dependency on these ports and find ways to reduce the chance that this happens again.
In doing so, we should remember that our objective is not to ensure that no problem ever happens, but to reduce it as much as possible. This means one must examine cost versus benefits and implement a risk management strategy, rather than treat everything as zero sum.
I'm no expert on supply chain issues, nor do I have a lot of knowledge about the topic. However, I've learned enough about risk management and cost-benefit analysis to know those are the best approaches to take.
I'm reminded about a parable of a village that spread its crop fields throughout, when somebody came along and suggested the villagers put all their crops right by the river. After all, why go through the hassle of transporting water from the river or building an irrigation system to bring it to the fields, when they can have one short connection to all the fields.
Except the villagers inform this visitor that the river is prone to flooding and, if they put all their crops by the river, a flood means they lose all the crops.
This is why those who look for "efficiency" don't always understand the situation. The villagers in this parable did risk management and cost-benefit analysis and determined it wasn't worth putting all the crops by the river, even if it wasn't necessarily efficient.
The question to ask about the supply chain issue, thus, is whether the people who put forward their ideas behaved more like the visitor to the village who never thought about the flooding river -- that is, they thought more about "efficiency" than doing cost-benefit analysis.
If "efficiency" is how we got to this point, it's probably time to ask if "efficiency" really is such a good idea.