Supply Chain Supply Net
This is the fourth installment in an ongoing series.
You’ve been hearing lot about supply chains
…in the economic news regarding international shipping of goods, and components of goods. Because international borders have been slammed shut in response to the SARS-COV-2 virus, many things are in short supply or completely unavailable.
This phrase is deceptive. The supply of goods (and services, for that matter) isn’t a chain.
A chain would be a simple thing. Store needs sprockets to sell. Factory needs a battery to make a sprocket. Battery needs lithium mined from the earth.
Mine > Lithium > Battery > Factory > Sprocket > Store
But that simple model is ludicrously unsuited to describing the real-world functioning of creation of even the simplest item.
The mine, for example, requires machinery.
The machinery requires fuel and lubricant and humans to maintain and service it. The fuel (let’s say diesel) requires its own oil wells and refineries, tankers and distributors.
The mine requires human labor.
The human laborers require food and clothing. The food and clothing requires fertilizer, factories, stores. They need protective equipment, which has to be manufactured as well. They need medical care, so hospitals and doctors are necessary. They need entertainment and communication, so theaters and sports arenas, televisions and smartphones are necessary…
Then the lithium is extracted from the mine.
It needs to be refined, so it goes to a lithium refinery where humans (with needs of food, clothing, medicine, entertainment and communication) operate machinery (needing fuel, lubrication, and maintenance) to pack the lithium into appropriate containers (also made in factories, by humans).
The lithium must travel to the factory
(using some sort of machinery or maybe on foot, but probably a truck or train with needs), and then other humans (with needs), wearing different protective equipment, use different machinery (with needs) to assemble casings, wires, and other components along with the lithium to make the batteries.
So, rather than a simple, linear chain, you’ve got something more like this for the first step alone:
And the lithium batteries are needed for each of the humans’ communication and entertainment needs, and also for the machinery that’s used at each step of the process, and for the medical functions that keep the humans functioning…
A slight disruption at any stage would disrupt the whole elaborate system.
Supply chains are more like supply nets.
A net is woven of multiple lines looping back on themselves and interlocking. If one of those connections is disrupted, the net won’t hold fish as well, and if the net isn’t mended promptly, the whole thing will unravel.
Just like an ecology, an economy is a mesh, web, or net.
The idea that we can merely prime the first step in the chain and get it moving again is a childish level of foolishness. The intricate interrelatedness of every single bit of our economy is the underlying source of sustenance and flourishing for everyone on the planet. And every single connection is vital to it.
So, instead of supply chain, say supply net.