Supply chain concerns loom over the global economy

Everyone has become a supply chain expert, even White House assistants. This is not a good development. It seems that everyone thought they knew how to disarm unexploded bombs.

Some people who have been systematically managing supply chain management for decades have questions about how the world they helped create develops.An all-round company organized through the application of supply chain geniuses, such as Alibaba with Amazon, Under relentless political pressure.

“Paddy” Padmanabhan of the Insead Institute for Emerging Markets in Singapore co-authored the influential 1997 paper Discuss “information distortion in the supply chain” and provide advice to large companies and other scholars on this topic.

Now, he says: “Twenty or 30 years ago, you had only three or four layers in the supply chain. We have more layers, so that it’s not clear whether we want to increase our viability. We may have more survivability than before. More bottlenecks and more confusion.”

At present, people all over the world are facing more shortages of traits, Oxygen in Indian hospitals to Gasoline on the East Coast of the United States to Automotive semiconductor Almost everywhere. Sino-US military operations in Taiwan, advanced semiconductor manufacturing in the Ruhr Valley and other geopolitical tensions have exacerbated concerns about the fragility of the supply chain.

Specific supply shortages will be resolved. The question is whether they are part of the general trend of intensified shortage cycles, subsequent recovery and excess inventory, which in turn leads to speculative inflation, which in turn leads to a deeper recession triggered by inventory liquidation.

This is part of Padmanabhan’s concern. Shocks that hit the global supply chain (such as Covid) will exacerbate the recession. He cited transportation. According to OECD data, about 90% of the world’s trade in goods is transported by ship.

Padmanabhan noted that many crew members are from India. Therefore, the impact of India’s lack of Covid vaccine distribution and oxygen supply is far greater than the country’s own imports and exports. He said: “Although visibility is higher today (in the event of an incident like Covid), the ability of ship operators to predict it is very small or non-existent.”

“Logistics” is the name of the supply chain discipline, which is derived from French military terminology and aims to solve such problems. If managers use system-wide perspectives to make decisions, they can minimize the tendency of over-ordering or under-ordering at each level of the production, transportation, warehousing, and delivery sequence. “Operation Management” engineers described this imposing of chaotic orders mathematically.

After World War II, gradual computerization enabled operations management algorithms to coordinate the flow of goods between companies and their suppliers.Even monetary economists give The microeconomics of supply chain management has provided a lot of credit for easing the recession in recent decades.

Except for now, it doesn’t seem to work well yet. A large number of disturbing major supply chain events have led to price increases or direct rationing.

The big debate between market participants and economists is whether the supply chain event is merely a “temporary” echo of the Kovic shock or whether it is a sign that headline price inflation has lasted longer.

I tend to think about “temporary,” but this belief becomes weak in every official statement. The reassurance of the Federal Reserve and the International Treasury Department will induce anyone to throw away their weapons and flee to the rear area.

We believe that scientific solutions to the problem of managing supply and production capacity are the limits of human rationality. As MIT professor and supply chain expert John Sterman said, Say: “In real life, there is no evidence of learning. People’s thinking patterns are too simple to deal with time delays well.”

indeed. Anyone who sees a large amount of unused equipment left behind after a foreign military operation has used excellent supply chain management will feel that perhaps logistics cannot solve all our problems.

Therefore, now I am more inclined to think that developed countries will enter a long period of economic depression. Rather than being an effectively managed aging Japan, all of us will be full of resentment towards Britain in the early 70s without having an interesting sex life.

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