A Philosopher Encounters Supply Chain Management: Why Great Companies Can Still Make a Bad Supply Chain
Usman Ahmed·
A fictional internship interview about two very real supply chain ideas.
The waiting room at Hartwell Home Furnishings smelled faintly of fresh-cut oak. The company made dining tables and bookcases in Michigan, then sold them through distributors and furniture stores around the country. Maya, a University of Michigan-Flint student pursuing her BS in Supply Chain Management, had come to interview for its summer internship.
Daniel Hartwell, the owner, welcomed her into his office. His philosophy diploma from a small liberal arts college hung behind his desk, above a shelf of books on leadership and a few well-worn classics: Plato’s Republic, Aristotle’s Nicomachean Ethics and Prior Analytics, and a dog-eared copy of Copi’s Introduction to Logic.
“Before we begin,” he said, smiling, “I have a question for you. I majored in philosophy, so humor me. I know supply chain management is a popular major. I just don’t see why it needs to exist.”
Maya set down her portfolio. “Well, that’s one way to start an interview.”
“Hear me out.” Daniel pulled a notepad toward him and picked up a pencil. “A supply chain is just a group of companies buying from and selling to one another. Let me lay it out the way my old logic professor would.”
He wrote three lines.
Major premise: If a supply chain is not optimized, the problem must be in one of its parts.
Minor premise: A supply chain is made up of companies and nothing else.
Conclusion: So if a supply chain is not optimized, at least one of its companies is not optimized.
“Now for the fun part.” He turned the notepad toward her. “Suppose every company in a supply chain is locally optimized, meaning each one is run as well as it possibly can be. And suppose the supply chain as a whole still isn’t optimized. By my argument, at least one company must not be optimized. But we just said every company is. That’s a contradiction. So the supply chain must be optimized after all.”
He added one more line.
Therefore: If every company in a supply chain is locally optimized, the supply chain is optimized.
“A proof by contradiction,” he said. “Philosophers call it reductio ad absurdum. So if every company is well run, the supply chain takes care of itself. Why does your major need to exist?”
Maya studied the notepad. “Your logic is valid. If your premises are true, your conclusion has to follow.”
“So you agree.”
“No. Valid isn’t the same as sound. A sound argument is valid and starts from true premises. Your major premise isn’t true.”
Daniel raised an eyebrow. “Go on.”
“You’re assuming that if a supply chain has a problem, the problem has to live inside one of the companies. Think about a relay race. You could put four of the fastest sprinters in the world on one team and still lose if they fumble the baton handoffs. No one on the team is slow. The problem lives between the runners.”
Daniel winced. “The fallacy of composition. Assuming that if every part is fine, the whole must be fine. My logic professor would be very disappointed in me.”
“Only a little,” Maya said. “In a supply chain, the handoffs are the prices, promises, and information that pass from one company to the next. A problem can hide there even when every company is well run.”
“All right,” he said. “Show me a business example.”
Three companies, one product, and the wrong inventory decision
Maya drew a quick path on Daniel’s notepad:
Manufacturer → Distributor → Retailer → Customer
“Let’s use one of your bookcases. Say it costs you $60 to make, and you sell it to a distributor for $80. The distributor sells it to a retailer, like a furniture store, for $90. The store sells it to a customer for $100.”
“So I make $20, the distributor makes $10, and the store makes $10,” Daniel said.
“Exactly. Now think like the store. It pays $90 and earns only $10 on each bookcase it sells. That’s a 10% margin on the $100 selling price. If demand is uncertain, the store has a sensible local reason not to stock too many bookcases. Extra inventory takes up cash and space. If the bookcases don’t sell, the store carries the risk. For a product that earns it only $10 a sale, avoiding excess inventory can look like the best decision.”
Daniel nodded. “A careful store stocks cautiously.”
“Yes—from the store’s perspective. But what’s the profit for the entire chain when a customer buys that bookcase?”
“A hundred dollars in sales, minus sixty dollars to make it. Forty dollars.”
“Right. Before transportation and handling costs, the whole chain earns $40 per sale: a 40% margin. A lost sale isn’t merely a lost $10 for the store. It can mean roughly $40 of lost profit across you, the distributor, and the store.”
“Hold on,” Daniel said. “So every time that store runs out, I lose twenty dollars too.”
“And the distributor loses ten. A single company that owned the factory, the warehouse, and the store would often be willing to carry more inventory to prevent those lost sales.”
Daniel looked at the numbers again. “But each company did what was best for itself.”
“And together, they did less well than they could have. That’s double marginalization. Each company adds its own margin and makes decisions based on the smaller slice it sees. The store isn’t being careless. Its incentives make a locally sensible inventory policy produce too little inventory for the supply chain as a whole.”
“So supply chain management is really about contracts that get everyone pulling in the same direction?”
“That’s one important part,” Maya said. “For example, you could promise to buy back any bookcases the store doesn’t sell, at part of the price it paid. That’s called a buyback contract. Now the store isn’t carrying all the risk, so it can afford to stock more when it makes sense, customers face fewer stockouts, and the companies can share the benefit. The details matter—the agreement has to be designed fairly—but it can move everyone closer to the decision a single company running the whole chain would make.”
Daniel tapped the pencil on his desk. “Okay. That’s more interesting than I expected.”
“Wait until you see what happens when customers start buying more.”
When a small change in demand becomes a giant order
Maya turned the page and wrote: Customer demand rises 10%.
“Now imagine every company watches only the orders it receives from its immediate customer.”
“That sounds normal,” Daniel said.
“It’s common. A furniture store sees customers buying 10% more bookcases, so it updates its forecast and orders more from the distributor. The distributor doesn’t see the customers. It sees a bigger order from the store and wonders whether demand is really rising, whether the store is stocking up extra, just in case, or whether it might place an even larger order next month. To protect itself, the distributor adds a buffer and places an even larger order with the manufacturer.”
“And we’d do the same thing,” Daniel said.
“The manufacturer sees that bigger order and adds its own buffer when ordering materials or planning production. By the time the signal travels upstream, a 10% rise in customer demand can look like a 50% or 80% jump in orders. That growing wave is called the bullwhip effect.”
Daniel frowned. “Even if every company’s forecasters are good at their jobs?”
“Yes. Each team may be responding reasonably to the limited information it has. Yet the system creates too much inventory in one place, too little in another, rushed production, avoidable shipping costs, and unstable schedules. The companies have amplified one another’s uncertainty.”
“What changes that?”
“Sharing actual customer-demand data helps everyone plan from the same signal instead of guessing from one another’s orders. Companies can also coordinate promotions, order timing, and restocking rules. So, to answer your first question: that’s why my major exists. Supply chain management is how companies make decisions together when their decisions affect one another.”
The interview turns around
For a moment, Daniel was quiet. Outside the office window, a forklift moved a finished dining table toward the loading dock.
“I’ve given that argument to everyone I’ve interviewed for this internship,” he finally said. “Some of them came from very famous colleges. Every one of them agreed with me. You’re the first person who argued back.”
Maya grinned. “My professors have real work experience. They’d never let me get away with agreeing to that. They don’t just give us vocabulary words. They show us what the ideas look like when a store runs out of product, a supplier gets the wrong signal, or a contract puts risk on the wrong company.”
“So you learn both the theory and the practical reason for it.”
“That’s the goal. Theory helps us recognize a pattern. Practice tells us what it costs and what to do next.”
Daniel glanced at the Prior Analytics on his shelf, then back at Maya. “Aristotle would have hired you,” he said. “Let’s talk about the internship.”
Supply chains are not just companies lined up in a row. They are relationships, information flows, promises, and decisions that connect people across organizations. A company can be well run and still struggle when those connections are poorly managed.
That is the UM-Flint advantage. At our programs programs, students learn the how and the why of modern supply chain management.