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Live Chat 10/16: Applying a Macroeconomic Lens to the Supply Chain

85 comments on “Live Chat 10/16: Applying a Macroeconomic Lens to the Supply Chain

  1. Daniel
    October 16, 2014

    Early Bird

  2. Daniel
    October 16, 2014

    Goodmorning everyone

  3. Daniel
    October 16, 2014

    Hope this will be an intresting section

  4. Daniel
    October 16, 2014

    All the best to Apek Mulay, for his new book release

  5. Hailey Lynne McKeefry
    October 16, 2014

    @Jacob. Welcome! Glad to have you here.

     

  6. Hailey Lynne McKeefry
    October 16, 2014

    @everyone, Feel free to post questions or thoughts ahead of time.

  7. Hailey Lynne McKeefry
    October 16, 2014

    We should be getting started at 2PM PST sharp, as soon as our guests arrive.  First, though, there are two housekeeping notes:

  8. Hailey Lynne McKeefry
    October 16, 2014

    First, please make a copy of your post before hitting the “post” button – just in case.  If the system “eats” one of your carefully crafted thoughts, please hit “Ctrl-Z” to recover it

  9. Hailey Lynne McKeefry
    October 16, 2014

    his will be a fun, fast, and friendly conversation, so please do not hold back with your comments or questions.  There are no dumb questions and we value everyone's point of view.

  10. Hailey Lynne McKeefry
    October 16, 2014

    Second, if you have problems posting, we suggest trying a different browser.  IE9 is a popular choice, but sometimes find Firefox, Chrome, or Safari work better.

  11. Hailey Lynne McKeefry
    October 16, 2014

    Questions, theories, ideas, real world experiences and even friendly rants are welcome here.

  12. Ashu001
    October 16, 2014

    Hi Folks! I was part of an excellent webinar/Discusssion on Supply Chain Management recently(today only infact);you can download the Slide-Deck as well as register for the Presentation archive here-www.oceg.org/event/managing-supply-chain-risk-view-oceg-illustrated-series/

    They also give you a CPE Credit for your efforts!

     

  13. Ashu001
    October 16, 2014

    I am sure Apek Mulay's Book will be a Total Mega-Hit!!! It wil be so much fun!!!

  14. Daniel
    October 16, 2014

    Hi all

  15. Daniel
    October 16, 2014

    Another two hours to go

  16. Ashu001
    October 16, 2014

    I was wondering what Apek Thinks of the Recent Spate of Strikes waged by Electronic Industry workers in China over Wages——–davidstockmanscontracorner.com/alert-from-chongqing-foxconn-strike-is-an-epochal-inflection-point

    Was also wondering whether Apek(&rest of the esteemed Panel here at EBN) agrees with the sentiments expressed by the Author-

    So Chongqing may be far away and hard to pronounce. But the workers striking there are actually marking a crucial inflection point. It is one that denotes the world's central banks have painted themselves into a corner and that the global economic and financial game of the last two decades is about to change. Big time.

  17. Ashu001
    October 16, 2014

    @Jacob-Absolutely!!!! 2 hours to go!!! This is gonna be superb!!!

  18. apek
    October 16, 2014

    Good morning everybody. Please read review by Internationally welknown economist and futurist Professor Ravi Batra published this morning on http://www.truthout.org http://www.truth-out.org/speakout/item/26863-is-mass-capitalism-the-wave-of-the-future

    I look forward to answer all your questions. Please dont be pessimistic …we have a very bright future ahead of us.

  19. Ashu001
    October 16, 2014

    @Apek-That's good to know(that you are optimistic).

    But my question is more on the lines of-Who is going to do the labor at the same(lesser if possible) costs than the Chinese today?

    Or are we just going to automate everything and get rid of all the Labor troubles at once?

    The only other way to solve this issue is to devalue the Chinese Yuan sharply(which will bring with it its own sets of Unique problems).

     

  20. Ashu001
    October 16, 2014

    @Apek-Very interested in whats your take on Ebola and the Incompetence our Administration is showing so far in tackling it—abcnews.go.com/Health/clipboard-man-hazmat-suit/story?id=26235850

  21. apek
    October 16, 2014

    Dear all bloggers …let us start our conversation in an hour…so that everybody will their questions answered

     

  22. apek
    October 16, 2014

    @tech4people…the problem with Ebola not only exposes the incompetence of administration but the CDC has not been able to track down all those affected in the same frontier airlines that the nurse was travelling immediately. It shows the inefficiency of supply chains of information exchanged.

    The protests of Chinese workers is justified for economic reasons. As a result of real low wages in China…the offshoring has survived for several decades but now that Chinese currency is becoming strong…the wages of Chinese workers have to rise with the growing standard of living of rest of the country. On the other hand the standard of living for Americans is steadily going down because of offshoring of manufacturing jobs. All these are the results of centralized supply chains. Neither are workers in US nor the workers in China…very happy about the situtation.

  23. Rodney Brown
    October 16, 2014

    Howdy Apek, and hello everone. Hailey is travelling today so I will be your moderator. We are just about 10 minutes from the start. I'm looking forward to many good questions, based on what we have seen already.

  24. apek
    October 16, 2014

    Hello Rodney. Thank You to EBN network for having me for this LIVE webchat. I would be glad to answer questions about decentralized supply chains and myraid economic problems that it would solve.

  25. Rodney Brown
    October 16, 2014

    Thanks for joinign us apek. And it is time to get things rolling everyone. I'm going to start with a groundwork question:

  26. Ashu001
    October 16, 2014

    Hi Rodney! Good to have u here! Hailey will be missed undoubtedly!

  27. apek
    October 16, 2014

    GO ahead Rodney.

  28. Rodney Brown
    October 16, 2014

    Apek, How is a centralized supply chain contributing to the loss of manufacturing?

  29. apek
    October 16, 2014

    In case of centralized supply chains…the companies which have a low cost manufacturing unit in Low cost countries…move the manufacuring to that location. Free trade enables them to gain profit form low labor costs. In this way…high paying manufacturing jobs from US have moved to LLCs for lower labor costs due to centralized supply chains

  30. apek
    October 16, 2014

    When one firm does this practice..other firms follow it to keep their profits high because of the demand from their share holders

  31. Rodney Brown
    October 16, 2014

    OK, that certainly fits with what we've all seen, but let's flip the question: How would a decentralized supply chain help stop that loss from happening?

  32. Ashu001
    October 16, 2014

    @apek-However,as you are also aware there are strict limits how far this transistion can go.Eventually you run out of Low Cost countries to shift production to(Its electronics and not Textiles we are speaking about here).

     

  33. apek
    October 16, 2014

    In case of decentralization of supply chains…what happens is that their is a preferance given to local suppliers. Additionally, the decision making is more decentralized. Hence, Decentralized supply chains are based on established human interactions of producers with consumers. The local supply chain ensures that the local demand for goods and local tastes are taken into consideration which also improves supply chain efficiency. Ofcourse Fair trade is very important as FREE Trade cannot continue in order to stop offshoring jobs

  34. Rodney Brown
    October 16, 2014

    @Tech4people, logic says you are right, but history has shown that the world so far has managed to find low-cost labor in a new spot when the labor costs in apreviously low country starts to climb too high.

  35. apek
    October 16, 2014

    @tech4people…yes…that is correct but in this process a lot of geo-political tensions arise. Do you know how much FOREX china and Japan own because of this practice. Today China is able to inflict harm on US due to ownershi of FOREX reserves due to offshoring of jobs to China. This practice is coming to an end…Just look at the situation of unemployment in US today. If this practice continues…then unemployment will never be solved and hence US economy would enter from recession to a depression.

  36. Ashu001
    October 16, 2014

    @Rodney-In Electronics u have to build the entire Supply Chain together(with Good Quality Infrastructure as well).This can't be done anywhere other than China today-Among the so called Low Cost countries.

    So u could realistically see more of that production come home to USA(via automation).

     

  37. Rodney Brown
    October 16, 2014

    Apek, that is certainly a good strategy for the region or country in which the decentralized supply chains exist, but doesn't it both increase costs of manufacturing and reduce the rate at which new higher-paying manufacturing jobs come to low income countries?

  38. apek
    October 16, 2014

    There are other reforms that go along which reduce the manufacturing costs. One thing to take into consideration is that Producer of goods also needs consumers. When there is too much unemployment…the consumer purchasing power is lost. Hence, there is loss of domestic demand. Now, Today even if the industries are reshoring …it will take time for revival of economy due to lost consumer demand.

  39. Rodney Brown
    October 16, 2014

    I hadn't considered that point, Apek, but it is a valid one for sure. Localized supply chain and manufacturing needs local demand.

  40. apek
    October 16, 2014

    Hence…the way decentralized supply chains would work is when there is a true free market economy. THe present centralized supply chains have centralized the US economy. Hence, we have a crny capitalism now instead of free market enterprise

  41. Rodney Brown
    October 16, 2014

    So, how does decentralization of supply chains help solve those kinds of socio-economic problems and geopolitical tensions?

  42. apek
    October 16, 2014

    There is too much concentration fo wealth in economy due to centralized supply chains. When the supply chains are decentralized…the concentraiton of wealth automaticlaly decreases and there is no need of any big government to intervene….producers and consumers take care of this process.

  43. kdawson
    October 16, 2014

    The loss of consumer purchasing power won't be fixed overnight. People have developed different spending habits. Consider the long shadow the 1930s depresison cast over the minds & habits of a generation.

  44. Ashu001
    October 16, 2014

    @Rodney-De-centralization works well in Theory problem is nobody is doing CAPEX today to achieve that.Also,de-centralization does'nt fit with Just in Time Theories.

  45. Rodney Brown
    October 16, 2014

    Welcome kdawson. And that shadow was lifted mostly by WWII — let's hope that kind of event isn't required.

  46. kdawson
    October 16, 2014

    apek, surely there are lots of causes of wealth concentration beyond centralized supply chains.

  47. apek
    October 16, 2014

    @ kdawson When wealth concentration in economy goes down…the purchasing power of the rest of the economy improves and there is more economic demand. It will be a bit painful time for couple of years afterwhich the things will get better in US economy Also, US economy never had decentralized spply chains anytime in past. HENCE, The taxes were high as hihg as 92% on richest americans after WWII

  48. Rodney Brown
    October 16, 2014

    Apek, that presupposes that the decentralization would happen in a country where the government doesn't want to interfere. Pretty rare, isn't it?

  49. apek
    October 16, 2014

    With decentralized supply chains…there is more cooperation over competition between the entitites of supply chains. Since the size of government is low…decentralization leads to lower taxes. We can either have a BIG government and pay taxes for corrupt politicians or we can move towards a free market economy and have lower taxes on individuals

  50. Ashu001
    October 16, 2014

    @Rodney-Very true.Such chances are limited today.Look at the Mess with Nokia's plant in Chennai,India.It exported 70% of India's electronic exports.Now nothing.INdian economy suffers from such foolish Government decisions.I could go on and on.Same thing in Argentina and Venezuela also today.

  51. Rodney Brown
    October 16, 2014

    OK, Apek, I don't see the tax connection so I'll bite: How would supply chain decentralization reduce taxes on individuals?

  52. kdawson
    October 16, 2014

    I'm with Rodney. Government is not going to get smaller.

  53. Ashu001
    October 16, 2014

    @Rodney-De-centralization will end up widening the Tax-base all across the world.Hence,you will see taxes on Individuals fall.

  54. apek
    October 16, 2014

    What we need is a true free market economy in US where wages automatically catch up with productivity with minimal government intervention. For this reason…decentralized supply chains and corporate manegerials reforms are critical.

    Regarding Taxes…decentralization of FEC is also needed which will empower local electorate…this is part of decentralized supply chains .

  55. apek
    October 16, 2014

    We have a centralized and unaccountable government. When there is a decentralized government…it will lead to less corruption and more accountabe government as economy will be decentralized.

  56. Ashu001
    October 16, 2014

    @kdawsom-De-growth of Govt goes against the Instincts of Govt.

  57. apek
    October 16, 2014

    Decentralized economy not only reduces taxes but even it empowers local elecorate in making local decisions which are in best interest of local tax payers. There is less corruption when the size of local government is SMALL and there is more vigilance over it by local tax payers. Hence, taxes fall down.

  58. Ashu001
    October 16, 2014

    @Apek-True Freemarket? Well we need to see a collapse of existing system first!

  59. Rodney Brown
    October 16, 2014

    Apek, I really think decentralized supply chains and coporate managerial reforms are two things wildly separated on the realistically achievable scale. And doing the former without the latter will only lead to lower taxes and greater profit-taking, not overall wealth increase.

  60. apek
    October 16, 2014

    This system will collapse by end of 2015….because it has become unsustainable. There are economic cucles…2015 crash of stock market is inevitable …and after that new system will emerge…we can either go into chaos or have a true free market economy

  61. apek
    October 16, 2014

    Just look at the economic cycles…there are 7 year cycles…2001 crash….followed by 2008 crash …followed by 2015 crash. Now…they wont be able to print money like 2008…the system will reform this time…as there are no other alternatives.

  62. Ashu001
    October 16, 2014

    @Apek-Will wait and watch for that development.Keeping my fingers crossed eitherways!

  63. Rodney Brown
    October 16, 2014

    I am pretty sure there will be some major economic shift within a year or two, Apek, but I am leery of statements of absolutes.

  64. Rodney Brown
    October 16, 2014

    But let's not get too far off the idea of the decentralized supply chain. Can you list some examples of companies in the industry that are doing particularly well or that could serve as a cautionary tale?

  65. apek
    October 16, 2014

    Well…I learnt the forecasting of the cycles from Prfessor Ravi Batra who has best forecasting record of any economists in modern times. Over 40 years of his career …he has made less than 5% errors in his forecasts about global economy.

  66. apek
    October 16, 2014

    Yes…it will work best for all companies which provide raw materials for eletronics industry. Look at the crisis in DRC region of Africa…if there is decetralization of supply chains…this crisis can very well be solved

  67. Rodney Brown
    October 16, 2014

    Apek, can you expand on the DRC example?

  68. apek
    October 16, 2014

    Urban logistics, emerging neo-cooperative corporations, etc. to name a few. One thing to note is that we cannot have low income taxes on individuals if we want to have a centralized economic system…in that case we will have to have a progressive tax structure.

  69. Ashu001
    October 16, 2014

    @Apek-DRC was excellent for Commodities.But can you also extend that to case of Rare Earths(China) or Chocolate(Ivory Coast) today?

  70. apek
    October 16, 2014

    In Congo…because the smelters are not close to the suppliers…the MNCs in US cannot have a transprency about the conflict minerals. The supply chains are centralized in procurement of these conflict minerals. Although Dodd Frank stresses on cnflict free minerals…not all have been able to achieve them. Some comapnies have just given up on ensuring conflict free minerals as it is impossible for them to ensure that

  71. apek
    October 16, 2014

    With regards to rare earths…in China…it is also to be noticed that there are several minerals which China lacks and no region of this world is self sufficient. Hence, Fair trade in necessary to exchange the minerals across the different regions in this world. The rare earth from China can be exchanged with some other minerals fromm its trading partners. So…Decentralized supply chains does not stop international trade but it encourages a FAIR trade over FREE trade

  72. Rodney Brown
    October 16, 2014

    So, decentralizing the supply chain in the Congo would increase transparency, and make it easier to source conflict-free minerals? That makes sense and sounds like a good idea.

  73. apek
    October 16, 2014

    Absolutely….in a decentralized supply chain…there is more transparency in decision making and there is less to lose and more to gain by acting in best interest of supply chain rather than individual entitites of supply chain behaving opportunistically

  74. Rodney Brown
    October 16, 2014

    So how much of the overall manufacturing process can be contain locally in this decentralized model? Or does it need to rely on Fair Trade to reach the other end of the manufacturing process somewhere else in the globe? And what happens when it runs into a centralized business partner?

  75. apek
    October 16, 2014

    If centralized supply chains have to continue then jobs have to brought back to US by reshoring. This is in the short run…but in the long run…the macroeconomic reforms have to ensure decentralization of supply chains to create a strong local economy and local high paying jobs.

    Fair trade has to be replaced by free trade to put an end to US trade deficits and budget deficits…which account to a total of 1 Trillion dollars of deficits.

    Hence, the change should take into consideration that country does not run any deficits

  76. Rodney Brown
    October 16, 2014

    That seems like it contradicts the idea of no government interference in truly free trade. No economy can become truly debt free without the government setting policy to help it do so, as far as I can see.

  77. apek
    October 16, 2014

    Well…on the bigger level to eliminate deficits…the government is needed. ONCE this system becomes a reality …there iwll be no mor eintervention of government.

    Now, When we have private aircraft…the government makes the airports …and maintains these airports…there cannot be 100% privatization but the intervention of government into economy should be minimal. This is very important.

  78. Rodney Brown
    October 16, 2014

    So as we get close to the end of the hour, what is the biggest critique of the decentralized supply chain being put forth today?

  79. apek
    October 16, 2014

    The is still need to have a government to run the country but what is important is to avoid the inefficiences in the government. Today, The government spends 1 million USD to create one job in economy. This is totally unsustainable. The intervention of government in economy is maximum today. This has to be done such a way that unemployed get jobs and then their unemployment benefits are taken away. This would be good way to progress.

  80. apek
    October 16, 2014

    BIGGEST critique is that IT is only way to have a free market economy which have lower incomes taxes on individuals. Else, we can have free market economy but with a progressive tax structure. Additionally, Decentralization of supply chains improves their efficiency and transparency.

  81. Rodney Brown
    October 16, 2014

    That sounds like it is going to take some really brave people to implement it. Does that make it easier to happen in still developing economies as opposed to established ones? Is that where we will see this innovation become established first?

  82. apek
    October 16, 2014

    Yes.. I am optmistic of this happening. Because given the curreny inefficies around the world…peopke are looking for an alternative system and businesses want low government intervention and people want lower income taxes. How can you achieve both…ONLY with decentralized supply chains. Please read a review published by Prof Batra this morning about my book “MASS CAPITALISM: A BLUEPRINT FOR ECONOMIC REVIVAL” http://www.truth-out.org/speakout/item/26863-is-mass-capitalism-the-wave-of-the-future

  83. Rodney Brown
    October 16, 2014

    Thanks for the lively conversation, Apek! Thanks for joining us today, and thank you everyone as well! Have a good day, all.

  84. apek
    October 16, 2014

    Thank You for having me Rodney. Best regards,

    Apek

  85. saiajay
    May 22, 2015

    yeah such a great article thank you

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