Choke point

The COVID-19 pandemic is making us aware of some serious problems with our supply chains. Toilet paper, hand sanitizers, and iso-propyl alcohol are still hard to find on store shelves. Personal protective equipment shortages have been felt by everyone. Potato farmers, losing their huge commercial market with restaurants, bars, and cafeterias shut down, have given away or dumped their crop. Dairy farms are pouring out milk they would normally have delivered to schools. The international market for crude oil collapsed and created a storage shortage, forcing producers to pay people to take the stuff off their hands.

And those are just a few examples.

I’m not informed enough about the global supply chain to make judgments. I’m not looking to point fingers, unless it is squarely back at me and you. We want all this stuff and we depend on a goofy global mess to make it work. I’m amazed it works at all! One factory in China, for example, could make a part needed by several industries all over the world and if that factory shut down all of those businesses would be impacted. Another example is the consolidation of the meat-packing business here in the States. It’s more efficient but the food supply is more vulnerable. When plants closed due to sick workers stores ran out of meat. Big chunks of our economy depend on systems that have real bottlenecks. If something plugs up that bottleneck everyone downstream gets hurt.

If you read naval history (like A.T. Mahan, for example) they always talk about choke points. A choke point is a narrow passage, like a strait, or an entrance to a bay, that could be defended by a relatively small force. Control of the choke point could thwart a superior enemy’s plans by closing off their access to your waters. The land equivalent would be the Spartans defending the pass at Thermopylae.

Our intertwined global economy is full of bottlenecks and choke points. Clearly we have to become more robust, with multiple sources for raw materials and other products. Industries have to plan better for disruptions and be more flexible.

You can get a great picture of the long and narrow threads that hold our world together at vesselfinder.com. You can zoom in on any part of the globe and pick out a ship. You can see Liberian oil tankers, Singaporean bulk carriers, and Maltese container ships plying the sea lanes in real time. Or check out flightradar24.com and find a plane. Did you know a large amount of cargo is delivered by passenger jet? When flights were cut it lead to delays and shortages. Look overhead and track down that contrail. For me it’s probably the Los Angeles (LAX) to Portland (PDX) run.

We are all knitted together by marine diesels and aircraft gas turbine engines! Not to mention the ribbons of asphalt and concrete that snake across our lands, and the motors of all sorts that power the rubber-tired beasts that prowl them. Like I said, I’m amazed it works as well as it does. People don’t seem to be that organized, but somehow they get this whole thing to hold together, even in a pandemic.

Thank goodness.

 

5 thoughts on “Choke point

  1. Probably the most famous naval choke point is the Strait of Hormuz. Trump’s most important choke point is his pharynx, wherein his french fries and hamburgers make the difficult trek from his mouth to his esophagus and then to his piggy-pig gut. Then the food is transformed into fecal matter and injected into the mouth of V. P. Pence. At least that’s what they taught in high school biology.

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  2. It works because it is not “a global supply chain.” It is millions of tiny, some international, supply chains. It’s the manufacturer of a product, be it an end product or intermediate, finding suppliers, be they prior intermediates or raw commodities. It’s not an entire neural network someone completely designed, it is millions of relationships built up by self-interested producers. You’re right that chokepoints are a problem when there is a failure along the way and few alternatives. It is not to the US credit that some of the chokepoints, for example in our food supply, were ignored (I suppose in the interest of “free markets” as defined by those who stand to profit from a particularly favorable definition) before they became a problem. Nor in the manufacturing of PPE (although I read where that has now started to be addressed through the efforts of non-profits, not the government). The government has (slowly) started to buy food to supply food banks, but it has not used the Defense Production Act invoked by the President to keep meat plants functioning, rather allowing them to close and open as they see fit. I suppose next it could be something vital to our national defense.

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  3. It’s like a big plate spaghetti! Follow one noodle all the way and you overlap a hell of a lot of other noodles! The fact that the system is NOT by design, but emergent, like you say millions of tiny supply chains, is what boggles my mind. Somehow it works. Sometimes you can’t get a roomful of a dozen people to get something working and yet the global flea market chugs along even during wars and pandemics.

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  4. If your company, or its key suppliers, carries limited raw material inventory and relies heavily on Asian sources of supply, you are at high risk of disruption says a new analysis by the Hackett Group.

    As to which industries are most vulnerable the group looked at risk factors including the comparison of raw material inventory and size to predict overall risk.

    Those industries that landed in the highest risk category include tools and hardware, electronics & appliances, auto parts OEM, building products, diversified chemical, and industrial specialties.

    While other industries will be affected, the telecom, automobile, computer peripherals, and industrial conglomerates have less inventory in their supply chain, the firms in these industries typically have the scale and resources to reduce supply chain risks.

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