[FoRK] The World Is Not Flat
J. Andrew Rogers
andrew at ceruleansystems.com
Tue Jan 19 15:51:08 PST 2010
On Jan 19, 2010, at 12:47 PM, Stephen Williams wrote:
> Day to day "box packing" and match making, not much more than craigslist postings or airline reservations in effect, doesn't seem like speculation to me. How do these other "quant" logistics companies operate? What is their leverage?
They do much more than spot-price match-making. Anybody can do that.
The "quant" logistic companies speculate on *future* needs that have not materialized and position assets over time in such a way as to minimize their cost when that need materializes. They anticipate customer demand in order to lower costs (and thereby maximize profits). Or in many cases, to not leave a customer unserved altogether because the assets are not available even when they could have been given sufficiently clever rearrangement of a set of assets.
Maximizing complex network throughput is a Hard Problem. In practice, there isn't a single, simple strategy that works well for all common modes of global supply networks. Predicting and rapidly adapting to mode transitions are essential.
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