Comment by zelon88 | Hacker News Reader

Comment by zelon88 | Hacker News Reader

I worked at a company who made products on contract, but the contract stipulated the vendor we had to use to get the raw materials. The raw materials were just aluminum castings, but they were a custom shape specifically for this customer of ours. They could only be used for this one product.

I noticed that the inventory levels of our vendor were dropping, but we weren't buying. Meaning our customer was ordering the same product from a competitor.

I proposed that we spend the money to buy the rest of the material at the vendor. Basically denying our competitor the materials and forcing either them to come to us or the customer dropping the order and reordering through us. This would have been a risk because that's about a year supply of proprietary castings that we can't use for anything else, but I really thought it was a worthwhile opportunity. But it went against lean principles so we didn't do it.

Fast forward 6 months and our competitor basically did the same thing to us.

Game theory. If the idea occurred to you, then one can almost guarantee it will eventually occur to others - and to someone at your competitor.

With that understanding, there's only one rational course of action: to secure your supply before they do, and your competitor realized all this.

The only real decision to make is whether to risk the more aggressive move of also locking up your competitor's supply.

Based on their example, in practice the decision is between dealing with reality and following management framework dogma at all costs.

Game theory offers amazing insights, but it doesn't really deal with internal company politics, the power of business consultants and the desire to obtain silver bullets.

Could it be that quarterly/annual budgets make one assume participation in a finite game, rather than infinite? That's precisely the kind of thing the author of the tweet chain seems to be describing.

There's risk to that. The customer company could have gone tits up or shit-canned whatever project they were using the finished castings for "because 'rona" leaving whoever is sitting on a year of castings in a bad position. There's risk to both approaches.

You describe microscopically what's happening macroscopically: The US is experiencing runaway consolidation and monopolization in every market sector. It is the business plan of every VC-funded startup discussed on this forum to monopolize a market and extract ALL the profit from it. The excess capacity of every supply chain in the entire country has been liquidated for short-term profit over the past decade, and then COVID happened. No one seems to be calling out this behavior, so I expect it will continue.

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