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May 23, 2016

The Quinton

Trades, Supply Chains, and Lead Times

by Jeff Quinton

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Trades are coming. We have discussed different types of trades, the importance of trades, and a lot of other things to do with trades. We have taken a look at the actual mechanics of trades here and there (we have discussed trading with different negotiation types, how we can use choice architecture when crafting trades, and so on), but we often overlook the supply chain of a trade. If, as the internet states, supply chain is “the sequence of processes involved in the production and distribution of a commodity,” then the supply chain of a fantasy baseball trade is the sequence of processes involved from the time a trade is conceptualized to the time it is agreed upon or disbanded.

The important (for this conversation) thing about supply chain, whether that of a fantasy baseball trade or that of a new-product launch, is that it is easy to overlook. It is easy to assume everything will just work out so long as we have the right idea and the right plan. This assumption, though, causes product launches to be delayed or less profitable, and it causes us to miss out on beneficial trades. Because we want to make as many beneficial trades as possible, we do not want to make this assumption—we do not want to overlook the supply chain of our trades. Maybe you do not overlook the supply chain of your trades. If so, well done. If not, or if you want to take read about the concept, then please find the below discussion around a critical concept of supply chain: lead time.

We again turn to the internet for a definition, and the internet defines lead time as “the time between the initiation and completion of a production process.” From what I can tell, we have four production processes and thus four lead times, which, when combined, will make up the lead time of the entire fantasy baseball trade supply chain. These four (and we could certainly break them into different buckets if we found a different arrangement more helpful in conceptualizing and making decisions about our supply chain) are (i) research and development, (ii) offer construction, (iii) initial response, and (iv) negotiation.

Some quick notes about these lead times: Research and development is just a gussied-up term for analyzing the competitive landscape and looking for possible trades. Offer construction is thus the actual building and designing of a trade offer. Lastly, we could have easily lumped initial response and negotiation together, but in my experience thinking about them separately is helpful as fantasy baseball participants vary in lead time regarding both aspects.

When we combine our own lead times (how long it takes us to strategize and formulate a trade as well as how long it takes us to respond and negotiate) with those of a potential trade partner, we can estimate the lead time it would take to complete a trade (or have the kibosh put on it). Estimating lead times in this manner will help us, in theory, to begin our trade discussions earlier and will thus lead to more beneficial trades. This works better than just overlooking supply chain all together, but there are a few other factors that relate to fantasy baseball trade lead times that we should consider.

The first factor we should consider is maximum lead time. Because we do not know who we will be trading with when we begin research and development, we should, if possible, begin our process to allow for the longest possible lead time. Some trade types take longer to complete than others and some owners, as mentioned previously, take longer to complete a trade with than others. In order to avoid limiting our demand (and thus increasing the chances we can sell for the highest possible price or buy for the lowest possible price), we need to make sure we begin our supply chain to allow for the completion of the maximum possible lead time. That said, some lead times are going to be so long (several weeks for example) that they will cause us to miss out on whatever trading window we are targeting; it is thus best to not factor in these lead times.

The next factors we should be considering are league norms and decision points. As mentioned in past articles each league has its own tendencies and its own way of doing business. A big part of this is that trades get made at certain junctures. Keeper posting deadline and trade deadline are obvious ones, but some leagues tend to make trades on transaction/waiver/FAAB days (usually Saturdays or Sunday), whereas others tend to see trades get made at any time. The consequence of these naturally occurring trade junctures is that we tend to, for example, wait until Sunday when putting in our FAAB to take a look at possible trades (for example within an example, a player we will be dropping that will be useful to other teams). This results in us either missing trades because of lead time or settling for lesser trades with either (i) owners with shorter lead times or, more likely, (ii) owners with whom we have previously made trades (familiar trade routes). Because we (people) are social beings, we like norms because they help us fit in, but in this instance, we need to adjust our process to begin in advance of these junctures in order to factor in lead time and get the best trades for ourselves.

Lastly, and most importantly, we need to factor in lead time because the owners that are making the most beneficial trades, the owners that consistently give themselves the best chances of winning, are already doing so. They do not, as so many of us do, send offers as if trying to complete a trade in franchise mode of a video game, expecting a near-immediate response. These fantasy baseball participants assuredly do not think about trades in terms of lead time and production processes as if ordering componentry for a run of finished goods, but they assuredly do consider (whether aware of it or not) the factors discussed above to improve their chances of making trades. That said, we can likely greatly improve our prolificness in fantasy baseball trades by factoring in lead time and beginning our fantasy baseball trade supply chain a little bit earlier than we have done previously. As with so many recommendations given here at The Quinton, our final recommendation is not provocative, but if we can keep improving the way we frame our decisions and design our processes, we will be more successful for it.

Jeff Quinton is an author of Baseball Prospectus. 
Click here to see Jeff's other articles. You can contact Jeff by clicking here

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