Supply Chain

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Description

Network Resource Planning

Bob Haugen:

"NRP means Network Resource Planning. Its purpose is to coordinate economic networks.

A Supply Chain is an Economic Network, with a head, which is the agent producing end products for consumers, and a tail, which is a tree of agents that supply them with components. A value system also includes the demand chain, which includes all of the agents who distribute the products from the head of the supply chain to consumers. It's shaped, as you may imagine, like an X.

A Business Ecosystem is more complex, shaped like a directed graph. See https://en.wikipedia.org/wiki/Business_ecosystem

“An economic community supported by a foundation of interacting organizations and individuals—the organisms of the business world. The economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organisms also include suppliers, lead producers, competitors, and other stakeholders. Over time, they coevolve their capabilities and roles, and tend to align themselves with the directions set by one or more central companies. Those companies holding leadership roles may change over time, but the function of ecosystem leader is valued by the community because it enables members to move toward shared visions to align their investments, and to find mutually supportive roles.”

Linux, Raspberry PI, and Android are examples of business ecosystems. Enspiral, Sensorica, and Fair Coop are examples of potential or wannabe business-like ecosystems.

If Enspiral, Sensorica, and Fair Coop converged with the Mutual Aid Networks, the P2P Foundation, a permaculture community, and a small-to-medium-sized city or two, they could become an economic network.

Capitalism is an economic network.

NRP in its present state is only able to coordinate small economic networks. If the current convergence and refactoring project succeeds, it will be able to coordinate larger ones. If the Value Flows project succeeds, it will be able to coordinate economic networks of any size.

The next economic system will be an economic network." (email, March 2017)

Statistics

From a conversation between Vinay Gupta and Sweetbridge CEO Scott Nelson:

" It’s $54 trillion of GDP globally, which … it’s two-thirds of the world’s global economy. Employees, the largest portion of people on the planet.

Vinay: So, this won’t be funny, but that would explain why it’s kind of large and complicated! Well, it’s two-thirds of the entire global economy! No wonder it’s complicated to explain!

Scott: Well, it’s just varied, and it’s called a supply chain, because there’s things that move from one party to another party to another party that are adding value, supposedly. Now, there are a lot of intermediaries that a lot of people would suggest don’t add value, but that add value in a chain. In practice, it’s more like a network. In fact, if you looked at the topology of it, it would look very similar to the topology of the internet.


...


Scott: Well, it’s all very woven together, and it’s all interdependent, in many ways, and it’s far more organic than people think it is. The supply chain is like the world’s largest DAO. A supply chain for some companies, economically, is larger than many nations. They’re mid-sized countries.


...


Vinay: Ah, interesting. How many people are involved in supply chain globally? Scott: I don’t know the exact number. I tried to actually find it, but it’s got to be close to at least three billion.

Vinay: Yeah. So, what we’re really talking about is, more or less, the sort of organizing principles for roughly half of the entire world’s activities.

Scott: A little more than half.

Vinay: A little more than half.

Scott: … entire activities.

Vinay: Okay. So, that gives a sense of the scope.

Scott: Let me put it in a frame of reference, for example, particularly for those on the blockchain. Financial services, which has received so much attention related to the blockchain, is only 13 trillion. Vinay: Okay. So, four times the size of all financial services. Scott: Yes." (https://blog.sweetbridge.com/scott-vinay-talk-a31e3a052f4e)


Discussion

How Hyper-competition leads to inefficiencies in the supply-chain

From a conversation between Vinay Gupta and Sweetbridge CEO Scott Nelson:

Context: Vinay and Scott just discussed how large corporations can get loans at 1%, which they are re-lending at 20%. This hidden subsidy overcapitalizes large corporations, and leads to hyper-competition which hides inefficiencies which are hard to dislodge.

"Vinay: But large organizations which are inefficient are hard to kill in the-

Scott: They’re hard to, basically, displace, because they have this unfair advantage of cost to capital.

Vinay: Yeah.

Scott: The other thing that’s going on is that, in supply chain systems, and this is a statistic that comes out of all the strange places as the Federal Reserve of the United States, is that the global utilization of assets in supply chain, factories, warehouses, trucks, boats-

Vinay: So, the degree to which these things are used fully?

Scott: Yes.

Vinay: Okay.

Scott: Yeah, that means, if a truck’s driving down the street, is the thing full, or is it only got one box in it?

Vinay: Yeah. Yeah.

Scott: It costs the same amount to drive down the street. If it has a full truck as a single box, pretty much. I mean, there’s a little bit more gas, but it’s not significant. So, how much are these assets utilized? Well, 50 years ago, the average supply chain asset was utilized 90%.

Vinay: Which sounds pretty efficient. I mean, 90%-

Scott: It was, it was pretty efficient. It’s now down below 75%.

Vinay: So it’s become two and a half times less efficient?

Scott: Correct.

Vinay: Wow.

Scott: And that trend is continuing. There’s nothing that’s stopping that, and that’s happening through hyper-competition, and through the … As our environments become more complex, we have broken things up into these different silos; and, as things have been broken up into these different silos, these silos, basically, become locking information about what’s going on with their assets, because they don’t want to share that information, because they’re afraid competitors or customers will take advantage of it.

Vinay: Like, Uber isn’t going to tell Lyft where its cars are.

Scott: Correct.

Vinay: Yup. Yup.

Scott: Yeah, same concept, or who their drivers are.

Vinay: Yeah.

Scott: And so, what’s happening is that, the more complicated things get, the more we, basically, break things up, and the more competition we inject in the environment. When you’re dealing with assets, you, basically, continually sub-optimize them; and so, not only have we made things less optimal because of these massive differences in cost to capital, we’re also making them sub-optimal, because we have all this underutilized capacity, which could be used-

Vinay: Oh, wait, hold on. So, it’s 25% of all of the infrastructure that’s supporting the supply chain-

Scott: Is underutilized.

Vinay: Which is, roughly, half of all the stuff in the world, which turns out to be, kind of, like an eighth of the entire capital base of humanity.

Scott: Yes.

Vinay: I’m beginning to understand what we’re playing for here.

Scott: It’s really, really big.

Vinay: It’s quite large."

(https://blog.sweetbridge.com/scott-vinay-talk-a31e3a052f4e)

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