Moment to moment it’s all about creativity and courage. Over the longer term though, it’s about supply chains and sustainability.Cuba is a case in point; its history is so visibly shaped by the interaction of these short term and long term realities.
Arriving in Cuba for the first time is like stepping into a time capsule that has preserved different periods of the country’s history. There’s old Havana filled with cobblestone streets and Spanish colonial buildings. Then there are art deco houses and buildings from the 1930s, and brightly colored and polished American cars from the 1950s: Cadillacs; Ford Fairlanes; and Chevy Nomads. Then there are the little Russian Lada sedans, and the big soviet-style apartment blocks. And mixing in with all that, you can see new Hyundai cars, and recently restored Spanish colonial buildings and art deco houses being turned into art galleries and restaurants. There was then, and is now, a different supply chain connected to each of these periods that made them possible.
Che Guevara and Fidel Castro – 1960 (courtesy Cuban Ministry of Education) Continue reading
Simulations show the best way to support a continuous flow of merchandise on the ancient Silk Road was to have large stocks of inventory at key locations. They would act as buffers to absorb the fluctuations in product supply inevitably created by the bullwhip effect. Two such locations are shown in the screenshot below. [This article picks up where the second article “Taming the Bullwhip on the Silk Road” left off]
And this observation raises a big question: Who would have owned and operated the facilities where these huge inventory buffers were located? It required someone with a lot of money to store and protect the inventory, and It required someone who looked to the long term to make money, not just from one year to the next. Let’s see what emerges.
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How was it possible in the year 210 A.D. to maintain a continuous flow of merchandise on the Silk Road and to match supply with demand as conditions changed from one year to the next? How could people without telephones or any form of communication faster than the pace of a camel caravan figure out how to operate this vast supply chain without continuously running out of products in one city and building up too much somewhere else? [This article picks up where the first article “Ancient Silk Road – First Global Supply Chain” left off]
Based on simulations of Silk Road operations, and a bit of historical research, an interesting answer emerges. This answer cannot be absolutely verified, yet it fits the available facts and provides a simple and coherent explanation. Let’s start with the simulation results. In the initial simulation the supply chain runs for eight weeks and then silk inventory runs out in Palmyra (4), as shown in the screenshot below.
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Imagine it is the year 210 A.D. and you are the head of the largest merchant trading house on the Silk Road. The long prosperity of the Pax Romana has created strong demand in the Roman Empire for the luxury products that you import from China and India. Chief among those products is silk. Everybody who is anybody wants their clothes made of silk.
Along the four thousand miles of the Silk Road stretching from the borders of the Roman Empire in the west to the Middle Kingdom (China) in the east, there are many cities and many merchants, yet all know your company and your name — you are the Merchant House of Barmakid in the city of Merv.
What we are seeing in this supply chain model and these simulations is the mental model you created and the intuitive understanding or “street smarts” you have acquired that enable you to comprehend and manage the business. This mental model enables you to run scenarios in your head and see how the different parts work together, the products, facilities, vehicles, and routes, and how changes to one affect all the others. (This article picks up where the previous one, Supply Chains of Rome — The Olive Oil Trade, left off.) Continue reading
You’ve worked in the family business for years and learned the olive oil trade. Your uncle just retired and now you run the show; it’s your time to show what you can do. And to be blunt about it, the family expects you to make money and grow the business – their livelihoods depend on it. Let’s take a look at the operations you manage. (This article picks up where the first article in the series, Supply Chains of the Roman Empire, left off.) Continue reading
Imagine it is the year 300 AD and you have just been promoted to run the family business. Your family is one of the wealthiest families in Roman Africa – the Septimi. The family owns extensive olive growing estates and is a major player in the olive oil export business. Are you up to the challenge of running this operation?
The Roman Empire got most of its wheat and a large portion of its olive oil from its provinces in North Africa. The province of Tripolitania (now part of Libya) produced an enormous amount of oil (olive oil), and huge fortunes were made growing olives and exporting the oil to Rome. Here is a picture of that supply chain.
In the spirit of the saying, “amateurs talk strategy and professionals talk logistics”, lets look at the campaigns of Alexander the Great. For those who think that his greatness was only due to his ability to dream up bold moves and cut a dashing figure in the saddle – think again.
Alexander was a master of supply chain management and he could not have succeeded otherwise. Continue reading