Hoarding Won’t Save You

The Fragility of the “Long Tube”

The modern global supply chain is a miracle of economics. It is also a disaster of physics.

We have built a system that relies on a “Long Tube.” We shove raw materials in one end (usually Asia), push them through a 10,000-kilometer pipe (the ocean), and expect finished goods to pop out the other end (Europe or America) exactly on time, every Tuesday.

For twenty years, this worked. The tube was cheap. The tube was predictable.

Then came the Ever Given. Then came the Red Sea attacks. Then came the pandemic lock-downs.

Suddenly, the tube is clogged.

When this happens, the average Supply Chain Manager panics. His knee-jerk reaction is primitive: “Hoard.” He screams at his finance director. “We need more safety stock! We need to move from Just-in-Time (JIT) to Just-in-Case (JIC)!”

He wants to fill warehouses with three months of inventory. He wants to build a fat buffer against the world.

He is wrong.

Hoarding is not resilience. Hoarding is obesity. A fat hiker can survive without food for a week, but he cannot run away from a bear. In today’s market, you need to run.

As a Supply Chain Minimalist, I do not fight chaos with mass. I fight chaos with simplicity.

Here is the “Victor S. Protocol” for surviving the next inevitable Black Swan event.

Step 1: The SKU Massacre (Kill the Zombies)

The biggest threat to your supply chain is not the Houthi rebels. It is your Marketing Department.

Marketing people love variety. They love “Long Tail” products. They will tell you: “Victor, we need the toaster in Red, Blue, Black, White, and Pastel Green. The Pastel Green is critical for the spring season!”

So, you order all five colors. Then the canal gets blocked. You have 500 units of Pastel Green stuck on a ship. Your warehouse runs out of Black. Customers want Black. They don’t want Green. You lose the sale.

Complexity is the enemy of agility.

The Resilience Math: It is exponentially harder to manage 100 SKUs (Stock Keeping Units) than 10 SKUs.

• If you have 1 SKU, you can put it on any truck, any pallet, any shelf. It is liquid.
• If you have 100 SKUs, you need specific slots. You have “wrong place, wrong time” problems.

The Audit: When the crisis hits, I call a “Death List” meeting. I pull the sales data. Usually, I find the classic Pareto distribution: 20% of the SKUs make 80% of the profit.

• The Black Toaster: 60% of sales.
• The White Toaster: 20% of sales.
• The Pastel Green Toaster: 2% of sales.

I kill the Green. I kill the Blue. I kill the Red. I focus my limited logistics capacity on the Black and White.

Why this works: If I only have to move one type of product, I can consolidate my shipments. I can fill a Full Container Load (FCL) instantly. I don’t have to wait for consolidation. If I have to air freight it, I am air freighting a bestseller, not a niche product that will sit on the shelf for six months.

The Lesson: You cannot protect everything. If you try to save every SKU, you will save nothing. Amputate the weak limbs to save the body.

Step 2: The “Lego” Strategy (Standardize Components)

In my German engineering days, we had a rule: “Standardization is Liberty.”

Imagine you are building a machine. You need a motor. If you design a custom motor that is only made in one factory in Shenzhen, you are a prisoner. If that factory shuts down, or if the ship carrying that motor sinks, your assembly line in Germany stops. You cannot finish the machine. You cannot bill the client.

Now, imagine you designed the machine to use a standard “NEMA 34” mounting flange. This is a “Lego” block. Shenzhen is closed? Fine. I buy a NEMA 34 motor from a supplier in Mexico. Mexico is expensive? Fine. I buy it from a distributor in Poland.

The “Generic” BOM: To build resilience, you must review your Bill of Materials (BOM). Look for the “Single Points of Failure.” Look for the parts that are unique to you.

• The Custom Cable: Why is it custom? Can we use a standard USB-C?
• The Special Plastic Housing: Can we use a standard enclosure for the internal electronics?

When the supply chain breaks, the company with standard parts wins. While your competitor is waiting 12 weeks for his custom “Gold Plated Connector,” you are buying standard connectors from Digi-Key or Mouser and shipping products tomorrow.

Resilience is not about having a warehouse full of parts. It is about having a design that allows you to buy parts from anywhere.

Step 3: Regionalization (The End of the Global Factory)

For thirty years, the logic was simple: “Make it where labor is cheapest.” That usually meant China or Southeast Asia.

That logic is dead. Labor is only 10% to 20% of the cost of most modern products. Logistics, tariffs, and risk are now the dominant costs.

If your customer is in New York, and your factory is in Vietnam, your lead time is 45 days. That is 45 days of inventory floating on the water. That is 45 days of cash tied up. That is 45 days of gambling that the geopolitical world won’t explode.

The “In Region, For Region” Strategy: I advise my Inner Circle clients to move to a regional model.

• For the American Market: Produce in Mexico or the American South.
• For the European Market: Produce in Poland, Turkey, or Portugal.
• For the Asian Market: Produce in China or Vietnam.

Yes, the unit price in Mexico might be 15% higher than in Vietnam. But look at the “Total Landed Cost.”

• Freight: Trucking from Mexico to Texas takes 2 days. Shipping from Vietnam takes 45 days.
• Flexibility: If demand spikes, the Mexican factory can react in a week. The Vietnam factory needs two months.
• Tariffs: USMCA (free trade) vs. Section 301 tariffs.

When the Suez Canal is blocked, the guy producing in Mexico doesn’t care. He is watching the news and drinking tequila. He is not calling a freight forwarder.

The Minimalist Truth: Short supply chains are robust supply chains. Friction increases with distance. Reduce the distance, reduce the friction.

Step 4: The “Cash Cannon” (Buying Capacity)

Sometimes, despite your best efforts, you get stuck. You need the parts now. The ports are congested. There are no containers available.

This is when you need to understand the hierarchy of logistics.

Logistics is a mercenary business. There is no loyalty. There is only the highest bidder. When capacity is tight, contracts are meaningless. The freight forwarder will swear he has no space on the plane.

Then, you pull out the “Cash Cannon.”

You do not ask for a favor. You ask for a “Priority Surcharge.” You say: “I will pay 50% above the market rate, cash upfront, for a guaranteed slot.”

Suddenly, space appears.

Most companies are paralyzed by their own bureaucracy. The Logistics Manager has to ask the Finance Director for approval. The Finance Director has to ask the CEO. By the time they get approval, the plane is full.

The Crisis Fund: I tell my clients to set aside a “Logistics Emergency Fund.” Give the Supply Chain Director the authority to spend up to $50,000 without seeking approval during a declared crisis. Speed costs money. But downtime costs more.

Step 5: The “Ghost Shift” Protocol

When the supply chain snaps, production usually stops. But what if you could produce without the missing part?

This is called “Partial Assembly” or the “Ghost Shift.”

Let’s say you are making washing machines. The microchips for the control panel are stuck in a container in Rotterdam. Most factories stop the line.

The resilient factory keeps running. They build the chassis. They install the motor. They install the drum. They build the machine 95% complete. Then, they store these “Ghost Machines” in a holding area.

When the chips finally arrive (maybe via air freight), they don’t start from zero. They just do the final 5% assembly (installing the control panel). They can flush 5,000 units out the door in two days.

The Requirement: This requires a modular product design. If your microchip is buried deep inside the machine, you can’t do this. If your microchip is in an easily accessible panel, you can.

Again, resilience comes back to Design. Your engineers must design the product so that the “High Risk” components are the last ones to be installed.

Final Thoughts: The Calm in the Storm

The next crisis is coming. Maybe it will be a strike at the LA ports. Maybe it will be a typhoon in Taiwan. Maybe it will be a new virus.

I do not know what it will be. But I know it will happen.

The Supply Chain Maximalist will try to predict it. He will buy expensive software. He will fill his warehouse with junk “Just in Case.” He will be heavy, slow, and anxious.

The Supply Chain Minimalist will not predict it. He prepares for uncertainty by stripping away the fat. He has fewer SKUs. He has standard parts. He has short, regional supply lines.

When the news breaks that the canal is blocked, he does not panic. He pours himself a coffee. He looks at his simplified dashboard. And he watches the chaos from a safe distance.

Be light. Be fast. Be simple.