[bluGill]

Companies that do just in time in fact are careful to manage their supply chain for this. I know my company orders steel 3-6 months in advance, in part because this eventually reaches all the way back to the miners digging the ore. They now can plan their work to ensure they don't have to pay overtime to meet our orders (compare to when we figured out the best price of the year and ordered a 1 year supply for delivery next week) which keeps costs down.

Insurance is a major part of any market, and insurance is very good to managing unusual events or externalities that matter.

[jandrese]

I wonder what the insurance payouts are like for power companies that let people freeze to death? Probably nothing because they'll claim they weren't to blame.

[RHSeeger]

There are laws in place to prevent the utility companies from cutting off heat in situations like this.

From: https://www.needhelppayingbills.com/html/utility_and_heating...

> Texas - State law requires that utility and gas companies are required to offer a deferred payment plan to families and individuals in the state. No disconnect can occur if customer agrees and adheres to payment plan for past utility or heating bills. No shut off is allowed if temperature is to go below 32 degrees, or in extreme heat. Also disconnection will be delayed if detrimental to the health of a state resident, but the customer must have physician certification to get this plan.

[jandrese]

They aren't getting disconnected, the power is going out because the operator didn't add enough margin into their system to handle abnormal events. In the race to offer the lowest possible price per kWh they made the system unsafe for sensitive groups.

[freeone3000]

The issue was rolling blackouts caused by insufficient capacity and lack of winterization in generation stations. I know people who lost power for 48 hours in 14F weather. We have at least 21 dead.

[ivalm]

Right, but I guess many of the people who died chose to risk rather than be stuck with a bill they cannot afford. Being allowed deferred payment is not enough.

[bluGill]

Most, probably all, of the people who died didn't have a choice, their power was cut off for the entire neighborhood. The bill they can't afford for the most part hasn't even been mailed yet (bills are generally monthly, this event wasn't that long ago).

[zbrozek]

Let's say you're a cloud operator placing long-lead just-in-time orders for hard drives with three different suppliers. Thailand floods and your carefully planned-in-advance delivery schedule is hosed. Your competitor with some inventory runway now has an advantage.

In many ways inventory is better than insurance because you're going to use it and so the cost is limited to storage.

[bluGill]

No matter how much inventory you have on hand it can eventually run out so you haven't actually prevented any problems, just delayed them a little longer.

Don't forget that we still have the 3-4 month pipeline to do something. That means we have time to put effort into the Thailand recovery plans into place. We often encourage recovery efforts to focus on the parts that we can only get from Thailand, while other parts that can be gotten elsewhere get sourced elsewhere. Our supply management systems have a check for is this a single source component because those are riskier. It isn't hard to read the news and look into our database and figure out where we need to put pressure. (We are a fortunate 100 company so there is some weight to throw around, plus we have several peer companies that are doing the same thing and will put their pressure on the same bottlenecks)

We have our supply chain mapped 6 levels down (this is mostly because we want to ensure the mines our ores come from down use child/slave labor, but there are side benefits) so when a disaster happens anywhere in the world we know how we could be affected and have months to prepare.

Inventory isn't better. Did you miss my comment about avoiding rust? Parts in storage degrade, can be stolen, cost rent to store, go obsolete, and otherwise have issues. Also it is better for the whole world if they have consistent work for their employees instead of nothing some weeks and overtime others, and the inventory systems tend to make that worse. Some inventory is useful anyway (and we have some), but it comes with costs as well.