Turkey day is nigh at hand
Start the parade, strike up the band
A day to reflect on our year in review
To give thanks that we made it through
Another year logged in life’s book
Celebrate the day and thank the cook!
I am sure by now you have heard about the supply chain disruption causing angst and panic.
“Buy your Christmas presents now while they are still in stock!”
President Biden says no one can explain the supply chain but I disagree. The supply chain, in fact any supply chain, consists of certain entities and several steps.
“A wise human would have an understanding of the supply chain and how the pieces fit together. But it’s against our nature to think about it.”
—Author Paolo Bacigalupi
Let us assume you manufacture the ever-popular widget. First you must find a supplier with the raw material. As everyone knows widgets are made of stupidium. You call the stupidium mining company and tell them how much you need. The mining company sends a truck and dumps the stupidium at your factory.
With raw material you start the assembly process and produce widgets. You ship the widgets to your retail outlet and the retailer sells the widgets to the ever-in-the-dark-about-how-things-work customer. As long as everyone along the chain does their part, your customers are no more the wiser about your supply chain. The chain is a series of steps linked to one another to supply an end product.
The product could be steel, oil, or a car. Each has their unique supply chain that takes one form of material and, as far as we know, magically transforms it into something useful, like a widget. Some supply chains have more steps or inputs than others. The manufacturer must coordinate all of these entities to get the end product to us, the consumer.
The problem arises when one of the links in the chain, say the mining company, fails to deliver. This could be for any number of reasons. Perhaps the vein of stupidium runs out, or the mining equipment breaks, or the miners want a living wage and go on strike.
The manufacturing equipment breaks down because the company deferred the preventive maintenance to save money or the fleet of trucks used to deliver widgets to the retailer all got recalled and are in the shop.
Part of the problem is Just-In-Time, JIT delivery. JIT was invented a long time ago in a far-off land. Manufacturers saw it could save money by reducing inventory and the costs of storage. If the stupidium arrived when needed you would not need to store huge amounts waiting to be turned into widgets. Every link in the chain relies on timely delivery. When it works, JIT is an efficient and cost-effective way to operate. When it does not work . . .
Let’s assume the demand for widgets slows. The factory reduces its orders of stupidium, and the mine reduces output and lays off its miners. If no one wants to buy widgets, why keep making them?
Then out-of-the-blue there is a renaissance. Oprah and J-Lo discover widgets and tout their virtues and many benefits. Demand instantly increases but the factory does not have a supply of stupidium. A call to the mining company finds they have all but shut down due to lack of demand. Hiring miners is difficult because they are receiving unemployment benefits and like staying home.
The whole supply chain grinds to a halt. The demand for widgets soars, and because there is a shortage, the price does too. Everyone scrambles to correct the situation but it is too late. Inflation rises and people become disgruntled. Had the manufacturer or the miner stockpiled stupidium they might have been able to survive the surge in demand until production could catch up.
“Supply chains are everywhere. From the biggest company in the world to running your household. We all have supply chain experience even if we don’t know it.” —EverythingSupplyChain.com
How does this compare to Thanksgiving dinner? To be successful you must source all the constituents of a traditional dinner. The turkey, the yams, the ingredients for the pecan pie, the gravy, and stuffing. You have to mash potatoes and create cranberry sauce, unless you get it from a can, and bake pies.
You do all of this in a bustling house full of kids and long-lost uncles and aunts, while some watch football and others offer suggestions. (My mother always . . ) Everything must come together at the appointed time, delivered to the table while still hot, with a smile.
Congratulations!! You managed the supply chain and delivered a great dinner. There were probably a few hiccups and bottlenecks but you overcame the odds with foresight and planning.
We should be able to get the country’s “Supply Chain” to operate as efficiently. After all, we have plenty of stupidium!
“The supply chain stuff is really tricky.” —Elon Musk
Give me a call.
Listen to a Ray Charles and James Taylor duet: “My Sweet Potato Pie”