Friday, February 25, 2022

Just-in-Case Chaos

Long Beach containers: the giant Legos that move the world
Image: Port Technology

During one of my brief bouts of non-academic employment, I worked in a business that was deeply involved in supply-chain issues. We packaged 100,000 meals every day, with food and packaging materials flowing into our warehouse and back out in an incredibly complex dance. 

Thankfully, I was not in charge of all that -- in fact, no one person could be. Even then -- in the mid-1990s -- logistics were complicated and pricing was so competitive that we measured the cost of everything to the tenth of a U.S. cent. Even though my role in all of this was rather peripheral, my employer knew the value of my understanding it better, and so I was one of many employees sent to take a course for supply-chain professionals called Just-In-Time. It was one of six parts of a certification program I did not complete, but it was the overview -- offering a global perspective that I continue to value as a geographer.

Of course, most normal people do not pay much attention to supply chains and do not even hear the two words being used together. But 2020 and 2021 (and 2022) are not normal times, so many people have become reluctant students of the vagaries of the world space-economy (as we geographers like to call it). 

For many, the incredible stuckedness of the Evergiven in the Suez Canal in March 2021 -- and the even more incredible stuckedness of hundreds of other vessels -- was the introduction to supply chains. For others, it had been the disruption of microchip and automobile manufacturing because of the March 2011 Fukushima nuclear disaster. In both cases, we became aware that efficiency and expediency come at the cost of resilience and redundancy.

In short, Just-in-Time minimizes costs and maximizes speed by not storing inventory. In extreme cases -- and most cases now are extreme -- parts enter an assembly line directly from a delivery truck, which got them from a train or a ship. I explained some of the technologies that make this possible in my 2011 post The Biggest Ships Ever

This is all very efficient and convenient, up until the moment it is not. Late in 2021, massive disruptions led to wild speculation and finger-pointing on the part of people who had not given the system much thought previously. I found two brief radio pieces quite instructive. 

In November, NPR reporter A Martinez spoke with Danny Wan, executive director of the Port of Oakland, about the persistent backlog at California ports. In December, NPR's Steve Inskeep talked with John Porcari, port envoy of the White House's Supply Chain Disruptions Task Force about the federal role in facilitating global traffic.

It is easy to conclude that when something goes wrong, some individual is to blame. But the world has become complicated in ways that are sometimes revealed only in crisis. We have an obligation to become better informed so that we can meaningfully participate in decisions that might make us even more vulnerable in the future, in exchange for small gains in efficiency.

Lagniappe 

Gas prices are another example of something that is far more complex than it seems and whose response to market factors triggers irrational responses, even among those who claim to love the free market

Blogger Crazy Eddie draws on the wisdom of Trevor Noah to explain why gas prices are high in a recovering economy. I share it here because both fuel prices and supply-chain problems have a prectable (and predicted) post-pandemic trajectory.

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