Are we now in a world of competition between supply chains?

competition between supply chains: image shows a rough representation of a global supply chain.

Since any chain is only as strong as its weakest link, and modern manufacturing supply chains are incredibly intertwined, it seems safe to say we now live in a world of competition between supply chains.

We all get the idea that a company is a group of people working in competition against other groups of people in other companies.

We also all get that a supply chain is a group of companies who all have some part, perform some function, add some value, to the creation of products and services.

Take for example the current inability to manufacture new cars due to shortages of computer chips.

The picture below is from a post in the Detroit Free Press in which the claim is made these Ford F150s are waiting for semiconductors before they can be finished, checked again, and shipped to dealers. The picture was taken on April 15, 2021.

Ford F150s awaiting computer chips

Products competing with other products means…

The iPhone vs the Motorola Moto G Power vs the LG Stylo 6.

These are products in competition with each other (although some iPhone users have told me there really isn’t any competition if only I would open my eyes), which means, in a very real sense the supply chains that produce these products are in competition with each other.

The companies building them compete

The manufacturing processes that bring these products to us involve so many parts from so many companies that to think of the product as being “made by” the company whose logo appears on the product completely ignores all the work done by companies whose names quite likely we’ve never heard of.

But they’re not built by just one company

Most products these days are not built by one company, but rather by networks of companies working within complex supply chains.

Suppliers to suppliers to suppliers….

Every company has had issues with suppliers.

But in the modern manufacturing era of complex supply chains, or perhaps more accurately complex supply webs, companies can no longer be concerned about just their immediate suppliers.

They need to be concerned about how the suppliers of their suppliers (and their suppliers, and their suppliers) are keeping to their agreements to keep components and subassemblies flowing.

Which means tracking systems must encompass multiple firms

It’s no longer enough for a company to understand the flow of components and sub-assemblies within their manufacturing processes.

They must understand this through their entire supply chain.

It’s entirely feasible that a shortage being experienced by a supplier three or four tiers away from you will lead to manufacturing slow down at one of your plants six days in the future unless action is taken.

Are these InterFirm tracking systems being built?

They’re being researched. Take for example this 2007 paper titled: Roles of interfirm information systems in supply chain management.

And some such systems are being built.

Consider, AirSupply

The most famous such system I know of is AirSupply, the European aerospace supply chain management system being used by AirBus and their network of suppliers.

So, the short answer is yes.

Does Boeing have an AirSupply type system?

I was unable to find evidence of such an InterFirm system being used by Boeing.

The various articles and studies I found that referenced Boeing supply chain management systems all spoke as if each firm in the supply chain tracks materials separately.

This article, from 2018 states:

Boeing has invested in helping suppliers beef up production including technology to monitor performance, Boeing CEO Dennis Muilenburg told reporters at the Farnborough Air Show, according to the Journal. 

Implies the answer is no, and as I’m not finding evidence such a system does exist, I’m guessing one doesn’t.

So in a very real sense, Boeing vs Airbus is competition between supply chains

And I think this is an inevitable part of globalism.

With the advent of relatively inexpensive computer systems and computer networking, and a network of fiber optic cables connecting the continents to each other, components and sub-assemblies are built wherever a comparative advantage creates the right combination of quality and price.

But this is no magic solution

Consider the article from 2018 I linked to above states that both Boeing and Airbus were struggling to deliver aircraft due to supply chain issues.

But they’re probably here to stay

So while it’s clear IntraFirm supply chain management systems are here, are here to stay, and will likely become more prevalent in the future, it seems inevitable they will also further “silo” markets.

In this case, around supply chain networks.

And in our current neoliberal economic paradigm which includes “bigger is better and competition is nice if you can afford it” I can’t help but wonder if creating supply chain silos will be overall helpful, or harmful.

Are bigger supply chain networks made up of large numbers of smaller manufacturers better than vertically integrated megacorporations?

Intuitively it seems to me that the answer is yes, but as with most societal and economic developments, it takes quite a while to see what, if any, unintended consequences emerge.

But, we’re definitely going there, for what seems like obvious reasons.

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