Another pattern that supports my theory that we are in an inflection point of global capitalism, forging new ground with little understanding of where we head.

We thought information technology was allowing us to see into the supply chain and control it better. While that is surely true on some level, the side affect is that we can make abrupt changes faster than ever too. And we may not understand the system as well as we actually thought.

This article makes me think of the "beer game". A business exercise we thought we had mastered.

Clarity Is Missing Link in Supply Chain

By PHRED DVORAK

Wall Street Journal

MAY 18, 2009

The reason is now starting to become clear. The world's complex "just in time" manufacturing supply chains are making it increasingly tough for Zoran, and any other single link in the chain, to know what's going on just a few links away. Sometimes, Zoran itself doesn't even know how its own chips are used: One batch it thought was destined for DVD players instead turned up in digital picture frames.

The recession has exposed a harsh side effect of the supply-chain system. Because modern industry rewards suppliers with the leanest inventories and fastest reaction times, when economic crisis struck, tech companies up and down the line contracted as sharply as possible in hopes of being the ones to survive.

Forced to guess at demand for their products in a plummeting market, everyone hit the brakes, hard. An examination of the electronics supply chain -- from retailers all the way back to makers of factory machinery -- shows that, at almost every stage, companies were flying blind as they cut.

"We're still not sure what happened," says Angelo Grestoni, owner of a California machine shop that mills aluminum parts for chip-making machines. He is many steps away from Zoran on the chain, but his clients, too, evaporated around the same time. Today Mr. Grestoni employs 150 people, down from 600 just 18 months ago.

The cumulative result: The tech pullback may have been overdone. In March, Best Buy Co. said it could have sold more electronics equipment in the three months ended Feb. 28, but its suppliers' deep cuts made it tough to keep shelves stocked. Suppliers "all decided to build a lot less," says Best Buy merchandizing chief Michael Vitelli.