Thursday, November 11, 2021

Supply Chain Woes Today: Predictable in Early 2020

Supply chain issues have been in the news a lot. As well as worker shortages, the Great Resignation (voluntary leaving of jobs) in healthcare and customer service type jobs, particularly. But while some people in the news like to blame politicians, most of us in business must admit that there are many other non-political reasons for shortages:

  • Diversion of materials and goods manufacturing to deal with COVID crisis last year, whether it was a massive shift to technology goods for remote work or diversion of steel from automotive to other industries; it can take a bit to have a return of distribution into the abandoned channels. Ever play the Beer Game?
  • Workers staying home: half stayed home because of COVID fears and lack of childcare. Even with the loss of extra unemployment benefits in the US and the reopening of most public schools this fall, many workers are still staying home.
  • COVID is still having an impact on the labor force availability. Perhaps you've seen reduced hours--even temporary closures--of many restaurants and grocery stores because of a lack of staff due to COVID exposures.
  • Many developed nations import from less developed nations and they have not had the COVID vaccine availability and therefore a much, much lower rate of resistance to the virus. Thus, the labor force effects we see here are amplified in those countries, which can mean goods and source materials being in short supply.
  • Logistics issues are exacerbated with yoyo demand in goods (remember the Beer Game?). Therefore, there can be excess pressure on trucking, shipping, air freight and so on creating log jams...and, you guessed it, shortages of goods and materials being available. Business inventories dropped 5% in the 1st 3 months of the pandemic and slowly rebuilt through the late winter 2021.
None of these have to be greater than at a 5% deficit for it have substantial impact throughout the economy. Suppose there are 10 steps--and this is very conservative--from raw materials to goods on the shelf. Let's say on average each step is 95% reliable (full quantity, on time). This is simplified because if any one step is lower than that, say at 90% or 80%, then the whole supply chain is maxed at the level optimistically. The probability that a good will be at full quantity and on time at the final stage is...60%. Therefore, 40% of the time or 2 out of 5 days or 2 out of 5 goods will be short at the point of sale (POS).

Ignore the politicians. This was predictable a year ago without a global recovery from pandemic health effects.

Wednesday, July 7, 2021

The Problem with Biographies, Case Studies and Other Career Advice

 I’ve written that I often advise that I know what’s worked for me in certain circumstances; I cannot, however, advise that those methodologies will absolutely work for you because I don’t know of the whole universe of attempts using the methodology. I don’t know the universal success rate for the advice.

Similarly, Stephen Dubner (Freakonomics) and Angela Duckworth (Grit) on their podcast “No Stupid Questions” discussed that biographers often confuse sequential events as causal events: “He lost sight in his left eye and thus he became a scientist!” Recently, it’s been reported that a group got funding to research career paths (I don’t know if it’s the HHS study started in 2007 and recently reported on or it’s something new). Culling from profiles (I assume like LinkedIn and other public places), the researchers hope to devise education and job options that move people down a desired career path.

Immediately I said, “You can’t!” There are too many other factors involved that got a person from point A to point E in their career path. It could be job-related connections—remember “it’s not what you know; it’s whom you know”—or certain experiences that garnered key vocational learning, such as being providentially placed on a successful team or a failing team. They won’t know about key mentors that encouraged us to progress or gain lateral/more well-rounded experience. They won’t know about bad bosses that discouraged us and caused us to take a vocational “left-turn”. Regarding academic achievements, they’re rating all certificates, associate/bachelor/master/PhD degrees as equivalent and not based on GPA or teaching strength of various schools and programs within those schools. They ignore aptitude and attitude towards certain endeavors at different career levels.

Trying to narrow this down is like trying to map out a successful path to avoid COVID: 100% of people who didn’t get COVID-19 woke up each morning, breathed air and put on some clothes; unfortunately, 100% of people who did contract COVID also woke up each morning, breathed air and put on some clothes. There are a lot more unaccounted factors that determine success or failure.

That doesn’t stop biographers, case study authors and career counselors from giving you advice based on what has worked for a limited known number of incidences. The inability to define all factors and describing a sequence of events as causally related—what Nassim Taleb in his writings like The Black Swan calls the Narrative Fallacy and applauded by Daniel Kahneman in Thinking Fast and Slow—doesn’t stop any of us from sharing our stumbling-blind, dumb-luck story as repeatable, reproducible and therefore statistically significant as evidence on how to succeed.

One of Taleb’s theories is that the difference between really good best-selling authors and really good unpublished authors is nothing in terms of talent. Between one group and the other, the difference is happenstance—timing of the manuscript hitting the right person’s desk at the right time when that person was in the right mood and having just read the wrong manuscript before picking up the new bestseller. As I counsel business owners regarding their sales efforts, I warn that sales success is just being in the right place at the right time: when the customer is ready to consider buying your product/service. Time it wrong and you don’t have the sale no matter what your technique is: you can lead a horse to water but if it ain’t thirsty, you can’t make it drink.