System dynamics

In view of the current global chaos in supply chains, what knobs are still left for companies to ‘twiddle’ right now? In the United Kingdom, there are reports of empty retail shelves and long queues at petrol stations due to the driver shortage exacerbated by Brexit. Meanwhile, the price of gas has risen to such extreme levels that the energy costs for aluminium manufacturers now outstrip the sales price, giving them reason to suspend their production activities. Additionally, severe shortages of computer chips, wood, metal, coffee and other raw materials are disrupting manufacturing around the world.

Besides this, at the time of writing, over 60 container ships are anchored off the ports of Long Beach and Los Angeles, waiting to be unloaded. Both ports are struggling to reduce the handling times and scale up to 24/7 operation. Moreover, rates for container shipping from the Far East have increased nearly tenfold over the past 18 months, effectively pricing traditionally cheap Chinese imports such as toys, sports gear and electronics out of the market.

Price increases raw materials

On top of all this, a European chemical manufacturer has seen the supply chain savings realized over the past few years completely evaporate due to the huge price increases for raw materials. According to the company’s supply chain officer, the only solution is to pass the price hikes on to customers – but the company lacks insight into what its competitors are doing and how this decision will impact on its own market share.

The only way to get a grip on this complex situation is to use the scientific approach of systems dynamics. The various cogs in the global supply chains are no longer turning in some places, resulting in unpredictable, non-linear consequences. Companies need to visualize the dynamics of their own ecosystem and also adjacent ecosystems. In my opinion, the best way to do this is on a huge board with interlocking cogs.

Turing Tumble

A game called Turing Tumble was launched in 2018. Players work to solve 60 increasingly difficult logic problems and learn the fundamentals of computer programming at the same time. This mechanical marble track with levers and cogs is actually ideal for modelling single – and even parallel – supply chains. Now let’s hope this game is still available, and preferably for the original price of €70.

Martijn Lofvers, Chief Trendwatcher Supply Chain Media
martijn.lofvers@supplychainmedia.nl