As the story of a small group of Mexican heroin traffickers demonstrates, just-in-time supply chain methods revolutionised all areas of the global economy, including the drug trade.
In the early 1990s, the US drug trade was turned on its head by an unlikely group of drug dealers from Xalisco, a town in the small Mexican state of Nayarit. At the very moment when just-in-time supply chains were revolutionising global patterns of consumption, these drug dealers inadvertently innovated a system of drug enterprise which adopted many of the same essential methods.
As journalist Sam Quinones details in his remarkable book Dreamland: The True Tale of America’s Opiate Epidemic, the heroin dealers from Xalisco first came to the US in the early 1980s. Following the lead of previous Mexican drug traffickers, they brought with them a form of “black tar” free-base heroin which – despite being less pure than the traditional white powder heroin that came to the US from Asia by way of New York – was much cheaper and more accessible for the American market. The Xalisco dealers initially established themselves in the San Fernando Valley in California, joining other migrants from their city who were working in legitimate industries. Here, they found themselves far enough away from the notorious Sinaloa cartel to be able to deal the black tar heroin without serious threat of gang violence.
This desire to avoid violence (which they rightly saw as bad for business) also guided some of their first major innovations: to take their business off the street and instead conduct it in cars and by phone. The Xalisco dealers were tied together by complex social ties back home, which made it easy to set up a fairly reliable hierarchy: at the top was the business owner, who for the most part stayed put in Nayarit; beneath him was the cell manager, who ran the local business in the US, then there was the telephone operator and the drivers, both of whom received a weekly wage, as well as food, a home and expenses, which the manager would keep a close eye on. Then there were the drug mules, often women, who would bring up a steady supply of black tar from home.
The dealers placed put a heavy emphasis on smooth and friendly customer service (including special offers for regulars). When buying the heroin, addicts would be given a number to call, and a place and time to meet. At the meeting point, right on time, they would find a driver, who would spit out balloons, each filled with a tenth of a gram of heroin, according to their needs. Along with small stashes in other parts of the car, the drivers would have about twenty of these balloons in their mouth. If they got stopped by police, they could quickly and safely drink them down with some water. This, and the fact that they didn’t carry guns, never engaged in violence and drove around in unflashy cars and wore equally unflashy clothes, meant they rarely got caught. Even if they did, they never possessed enough to be given prison time. Rather, since the drivers were anyway often there illegally, if they were caught, they would be deported back to Mexico.
The Franchise Goes Nationwide
By the late 1980s, the model which the first Xalisco migrants had brought to the San Fernando Valley had become a victim of its own success, enough other people from Xalisco had seen there was money to be made and so the market became saturated. At that point, instead of the usual descent into turf war that this saturation brings about (which would have been unthinkable given the close social ties) a few intrepid dealers began setting up new outposts beyond the comfort zone of their Xalisco immigrant community in San Fernando Valley.
Often, ostensibly rival dealers would exchange notes when they were back in Xalisco, slowly working out a shared code to maintain as they expanded to new markers. In the course of the next decade, they got as far as the Mississippi River and beyond, reaching numerous cities in the depressed and deprived post-industrial rust belt, where people had never before seen such potent heroin, yet were beginning to get hooked on emerging legal opioids supplied by pharmaceutical companies as prescription pain medication.
The Cost of Innovation
In his book, Quinones specifically compared the Xalisco drug dealers’ approach to a fast-food franchise, governed by principals of just-in-time supply. The hallmarks are clear to see: the small quantities of stock constantly on the move; the frequent changes in personnel; the tendency to share information with ostensible competitors; and the focus on smooth customer service.
Such innovation would be admirable if it weren’t for the immense human cost that came with it. This is what Quinones’ book is principally about, the opioid crisis in the US, a crisis which the Xalisco dealers had a major hand in exacerbating. Yet while the Xalisco dealers were refining their method, they were given a helping hand by the increasing commercial availability of prescription opiates like OxyContin. After decades of persuasion, America’s pharmaceutical industry had found a way to prescribe opium to ordinary patients, for a price, and in the frequent event that this price became too high to maintain a habit, the dealers were ever on hand to replace the patient’s addiction with an even more dangerous one. As a result, the rate of overdose deaths related to opiate overdose went from 3 per 100,000 in 2000 to 15 per 100,000 in 2017.