This year, for perhaps the first time, the 'supply chain' has entered the national news. Many average citizens are puzzled, not to mention concerned and sometimes angry, about problems blamed on the 'supply chain.'
Now, many of you reading this have worked as a part of the supply chain for many years, as I have. Even so, it is hard to appreciate the complex dynamics of this system. And how fragile it can sometimes be.
I have had the opportunity to work at several levels of the global supply chain for more than 20 years and have bought hundreds of containers of goods from more than 25 Asian suppliers. I’ve never seen anything like 2021.
I have been studying this for some time now and want to share some things I’ve learned — particularly those that contradict the sound bites on the news. No surprise that the current supply chain crisis is a lot more complex than cable news can report.
[RELATED: The 'everything' shortage facing manufacturers]
First, just a bit of theory. Increased volumes often disrupt complex systems, based on what’s called the 'bullwhip effect.' This is the tendency of complex networks to amplify signals and increase variation. Part of the reason for this is that as a volume change runs through a dynamic supply chain, constraints appear — sometimes in unexpected places.
These can be simple. For example, as volume increases, the presence of stacks of inventoried containers may slow down the flow of other containers. What isn’t at all obvious, or consistent with common sense, that many of these effects are non-linear, even exponential. Thus, as you approach some constraints, the delays can quickly get out of hand. People generally think — and common sense dictates — that things behave in a linear manner. But complex networks often don’t. It turns out the math behind these markets is very complex.
