Supply Chain Failure Exposes Cracks In Capitalism

For decades companies have been running on slimmed-down supply lines and never build resiliency into them. The idea was that they would make them as efficient as possible to reduce costs. Now after the pandemic and other world-shaking events, the cracks in this system are exposed for everyone to see.

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The semiconductor issue is broadly similar. You have certain plants that make substantial amounts of particular types of semiconductors. Taiwan's semiconductor manufacturing company is the market leader and those components go into just a host of different goods from electronics to automobiles and this is why we've seen shortages in all of those areas. So we did not we have not operated on that fundamental idea of resiliency. Where you disperse this you diversify your supplier base and you make sure that anyone disruption isn't going to affect the entire product line. We have operated on a much different philosophy. One that says let's look for the lowest cost. Let's look for economies of scale. Let's look for efficiency throughout the supply chain. Let's deregulate what we have to put forward. So that we're paying the lowest cost to get those goods shipped and into place. Let's use just-in-time logistics so that we don't waste quote-unquote waste money on inventory. As we get the goods off the ships we get them right into the warehouses we get them then right into the retail space and out to customers as quickly as possible. And we only order what we need. That has been the guiding philosophy of supply chains and logistics and supply chain management. And it frankly bit us in the ass in the pandemic years.