The Secret of the Pencil


The writing instrument, the pencil is purported to have been invented in 1795.  It has been around for a while and continues to serve a useful purpose.

In the following video, the late economist Milton Friedman describes the process for manufacturing this simple longstanding tool.  The point he makes is that regardless of the simplicity and maturity of a product, it requires a robust supply chain from raw material through the distribution of the finished product.

He makes the case that no single organization can make this simple tool without help from many economic actors and the thousands of organizations employed either as employees or part of individual supply chains.  This is a powerful argument for free market behaviors.  Well worth a little over 2 minutes of your time to view.

As of this writing, there is probably more discussion about the global supply chain than this writer can remember.  The last time we saw such exposure was after the 2011 Tōhoku earthquake and tsunami, offshore Japan.  However, it was specific to goods and services provided from Japan.  This time it actually is different.  The current shipping disruption is purported to impact on the US holiday gift giving season.  The resulting impact on firms of all sizes may be dramatic and even impact on all levels of politics.

States like Florida and Georgia and others are arguing that Asian shippers gain value by landing at their ports versus the closer ones on the West Coast of the United States.  If the economics bear this model out, significant long-term changes may be made.

Pundits, including this one like to talk about Creative Destruction and the systemic changes that can come about as the result of an event.  While the pandemic may be the causal incident, the global supply chain will likely be the lasting impactful change in global commerce.

As with the simple, mature product the pencil, every firm’s lifeblood is its supply chain.  How it works through this transformational period may help declare the winners and losers going forward.

In our forthcoming book, we address the emerging Smart Manufacturing model and the role of the supply chain in the future.  Expect this component to become even more important.  Disruptions like the current one will ruin more than just the ability to manufacture automobiles.  Those with weak SC strategies will most likely fail.

What is Your Firm Doing to Develop the Robust Supply Chain of the Future.

For More Information

Please note, RRI does not endorse or advocate the links to any third-party materials.  They are provided for education and entertainment only.

Interested in Cross Cultural Engagement or DEI, check out our Cross Cultural Serious Game

We presented, Should Cross Cultural Serious Games Be Included in Your Diversity Program: Best Practices and Lessons Learned at the Online Conference, New Diversity Summit 2020 the week of September 14, 2020.

Contact the author for information on these and others subjects covered in the Critical Mass series.

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