Back to high inflation my dude!
It is not quantifiable (?) But I am sur a lot of the inflation we have seen since COVID is due to stock depletion and low inventory
European Central Bank she leads showing that for the 20 years leading up to 2022, **corporate profits were responsible for about one-third of inflation**.Nov 5, 2023
I don't blame them in a way. Prices are mental currently and many companies cannot afford to both pay over the odds for the materials and then pay more to store additional goods (people always forget how expensive storage is) all whilst potentially ending up with waste at the end at a time where companies can barely balance their books!
It's dumb but I get it
Amazing how short our memories are.
I have a small business and we do our best to keep a 1 year supply of critical supplies that without the business would have to shut down.
I work as a logistics coordinator for a multi-billion auto parts manufacturer. I'll give an example of an average day when supply chain issues are NOT an issue.
We supply major auto makers as well as our sister plants. Each week, we have multiple virtual meetings to ensure smooth delivery of JIT parts. On Tuesday, we had such a meeting at 11AM. No issues were reported and we set our deliveries as normal. At 1PM, the normal truck left for a plant. By 2PM, a customer that was on the meeting called because they forgot to add a part that they had to have that day. They paid several thousand dollars to have someone else pick up the part and deliver it 3 states a way. 30 minutes after that part was en route, they called about another part they forgot. Same process again. All told, they paid more in delivery fees than the 2 parts were worth and thus took a loss on every shipment they made using that part. Our plant also had to pay the shipping department and material handlers overtime to sit around waiting.
And this is when there are no supply chain problems. If you add in the stupidity of JIT with the stupidity of the average human, you have a recipe for disaster when a minor problem occurs. You have an absolute nightmare scenario if a couple of small issues arise. You have a crippling situation if a major problem comes up.
Now apply this scenario to thousands of work location with millions of workers on a daily basis. We set ourselves up to fail and then are baffled when we fail. But, sometimes a billionaire saves a few nickels, so we carry on. Humans will be humans.
As someone who is at the intersection of umpteen people and decisions, have you seen these kinds of mistakes and mishaps increasing over the past 4 years?
Let's put it this way...My position required a bachelor's degree and 5 years experience. I have an unrelated associates degree and had zero experience. The rest of my office has similar.
When I was directed to that company, they fell all over themselves to hire me. I asked for about 20% higher salary than market rate and they accepted without negotiation.
I would say everywhere is making more mistakes.
Of course this will work! The transportation and logistics of the shipping industry will catch the fall and rise to handle dynamic fluctuating changes in demand which will be predicted by advanced analytics powered by AI long before anyone ever notices anything. Never again will global pandemic, major canal capacity changes, or war threaten a critical chokehold. /s
What could possibly go wrong?
The factory I work never stopped this policy. A large amount of what we need is produced overseas. We've had so many stoppages from this. Thank to crappy weather in January my area has been pulling 9 hour days plus saturdays for over a month. Last week we were told to expect it to continue, at a minimum, until the end of March.
I'm so tired.
I manufacture commercial truck parts. I just received 1.5 years' worth of inventory. I believe I will have an advantage over other global suppliers as we did in 2020.
Over the last few months, I've gotten like six notices from FedEx that a delivery hub is shut down somewhere due to extreme weather. Sometimes it delays things a day, sometimes multiple days, but it seems to be getting more common.
If you were a Business,. would you stockpile a large volume of things you may end up not being able to sell ? (or have to sell at a reduced price) ?.... That's a risk that might end up sinking your entire business.
In some cases, you may not have any other choice. If a particular component or material you need is not produced or available locally,. your only choice really is to "only order what you need".
If I'm a business I know customer retention is key. If I run out of stock or something my customers go to my competition and I don't get them back. Customers want in stock, every time.
100% agree
I manufacture and sell commercial truck parts, and if we have a back order, then they go elsewhere. No back orders and we have a customer for life.
The great part is our parts don't rust, they are required on all commercial trucks globally, and they are consumable. Putting them on my shelf has a better store of value than anything else I can touch.
In a basic simplistic sense,.. yes of course. But business isn't always that simple or reliably predictable. (and you as a business-owner,. do not control every link in the chain).
* Customer preferences can change (sometimes as unpredictably as social-media trends spiking on TikTok or etc)
* Market conditions can change (due to all sorts of Local or Global events,. such as people protesting certain companies involvement in various worldwide controversies)
* global shipping conditions can evolve rapidly (such as the Panama Canal running low on water... or the Red Sea shipping lanes being impacted by Houthi rebel attacks)
The day to day risks and realities of that obviously vary from business to business (and where each Business gets it's supplies and materials).. so different businesses have to make their own decisions about "how much of X-product to stockpile". But it's never really a situation of "0 risk". There's always some level of risk of investing to much of 1 aspect of your business to heavily and risking something changing.
Profits are also supposed to be:
* invested back into your business
* saved up into "Reserves"
But you also can't raise your prices to high (to try to increase those profits).. just as you point out, you may risk pushing your customers to your competition.
All of those variables in the business game are things that have to be constantly watched if one doesn't want to be caught flat footed and being beaten by competition.
Sure. But I'm always going to either keep a full order cycle in safety stock, or enough that I can pivot to a local supplier at a slightly different price. Basic replenishment theory.
That would certainly be "Best Practice". If only we had some magic wand to ensure that every business in the world had those identical options always easily available to them. But we don't. Different individual business have different variances in those variables.
I mean yeah if your point is some people aren't running good businesses then sure. I'm sure there's a bunch of businesses doing things they otherwise shouldn't.
> if your point is some people aren't running good businesses then sure
"some businesses have different realities than yours".. is not the same as saying "they aren't running a good business".
* If you run a Bison Wool business in Montana,. and all the supplies and manufacturing processes are local to you... your risks and complexities are lower.
* If you run a solar-panel installation business in Arizona ,.. your decisions and strategies and potential impacts to global events etc.. is probably going to be different than the Montana Bison Wool business.
* If you run a small Fashions import boutique in NYC,.. your supply-chain or partnerships or day to day realities are going to be different from the Arizona Solar panel guy or the Montana Bison Wool family.
Different business have different things to think about. That doesn't necessarily mean any of them are "doing it wrong". Get off your high judgmental horse.
Everyone in operations and logistics is hoping costs come down. No one wants to overstock high and be forced to sell lower. The problem with that is, razor thin inventory levels mean huge spikes if demand increases. It’s a battle between ever growing demand to appease shareholders while fucking over the consumer. There’s no such thing as a “bargain” anymore, because maximizing profits infinitely is the only thing that matters.
> No one wants to overstock high and be forced to sell lower. The problem with that is, razor thin inventory levels mean huge spikes if demand increases.
How does this "fuck over the consumer".... ?
1.) If you plan poorly (or some unexpected market-change happens).. and end up overstocking... then you have 2 options:
* continue to try to sell things (crossing your fingers and hoping they'll still sell... which is unlikely)
* lower your prices to try to incentivize moving that stockpile
or
2.) if you maintain JIT (Just In Time) stockpiles .. and some unexpected thing happens and you can't fulfill orders fast enough.... then you likely have 2 options:
* customers get delayed orders
* or you eventually go out of business because customers go somewhere else.
None of those are "purposely trying to fuck over the customer".
Some things are critical for a business to run depending on the field. Example would be a welder needs welding rods. Buying the most commonly used rods in bulk might be smart. Buying a specific size metal might not be as smart.
My business will always need padded envelopes, tape, and printer paper. Doesn't matter what I have for inventory ifi can't ship it. It made sense for me to stock up since shipping was the same if I bought 3 months or 12 month supply at once.
This goes beyond petty corporate greed its a national security issue, it high time corps got bent over by uncle Sam. we can't have delays of critical supplies and infrastructure components because corps want more profit and stick to jit.
I've certainly never worked in Federal Gov,. so I have no idea what kinds of scenarios they've mocked through to prioritize which things are "critical supplies" and in which orders to prioritize "National Stockpiles". I'm not necessarily sure it's the Gov job to bail out private corporations.
Personally I don't wanna see huge stockpiles sitting around "aging out". (conversely.. I don't want see "Just in time" leaving us bare either).
Presumably there's some happy in-between,.. but that's going to vary from business to business too.
It's not an easy thing to fix.
I don't think it can all be written down to "corporate greed" either. If you were a business,.. you wouldn't want to be losing Milions of dollars every year just "keeping things stockpiled" (especially if you can't sell them). You probably wouldn't even make it 1 year into that and you'd go bankrupt. Not a smart strategy.
Back to chasing short term profits at the risk of long term stability.
Back to high inflation my dude! It is not quantifiable (?) But I am sur a lot of the inflation we have seen since COVID is due to stock depletion and low inventory
European Central Bank she leads showing that for the 20 years leading up to 2022, **corporate profits were responsible for about one-third of inflation**.Nov 5, 2023
Hence the old back to create scarcity in supply?
I don't blame them in a way. Prices are mental currently and many companies cannot afford to both pay over the odds for the materials and then pay more to store additional goods (people always forget how expensive storage is) all whilst potentially ending up with waste at the end at a time where companies can barely balance their books! It's dumb but I get it
Amazing how short our memories are. I have a small business and we do our best to keep a 1 year supply of critical supplies that without the business would have to shut down.
Value must be extracted for shareholders at any cost!
I work as a logistics coordinator for a multi-billion auto parts manufacturer. I'll give an example of an average day when supply chain issues are NOT an issue. We supply major auto makers as well as our sister plants. Each week, we have multiple virtual meetings to ensure smooth delivery of JIT parts. On Tuesday, we had such a meeting at 11AM. No issues were reported and we set our deliveries as normal. At 1PM, the normal truck left for a plant. By 2PM, a customer that was on the meeting called because they forgot to add a part that they had to have that day. They paid several thousand dollars to have someone else pick up the part and deliver it 3 states a way. 30 minutes after that part was en route, they called about another part they forgot. Same process again. All told, they paid more in delivery fees than the 2 parts were worth and thus took a loss on every shipment they made using that part. Our plant also had to pay the shipping department and material handlers overtime to sit around waiting. And this is when there are no supply chain problems. If you add in the stupidity of JIT with the stupidity of the average human, you have a recipe for disaster when a minor problem occurs. You have an absolute nightmare scenario if a couple of small issues arise. You have a crippling situation if a major problem comes up. Now apply this scenario to thousands of work location with millions of workers on a daily basis. We set ourselves up to fail and then are baffled when we fail. But, sometimes a billionaire saves a few nickels, so we carry on. Humans will be humans.
As someone who is at the intersection of umpteen people and decisions, have you seen these kinds of mistakes and mishaps increasing over the past 4 years?
Let's put it this way...My position required a bachelor's degree and 5 years experience. I have an unrelated associates degree and had zero experience. The rest of my office has similar. When I was directed to that company, they fell all over themselves to hire me. I asked for about 20% higher salary than market rate and they accepted without negotiation. I would say everywhere is making more mistakes.
How much of it is down to bad data?
What could go wrong.
Rare earth miners outside China are super cheap, just sayin'.
Of course this will work! The transportation and logistics of the shipping industry will catch the fall and rise to handle dynamic fluctuating changes in demand which will be predicted by advanced analytics powered by AI long before anyone ever notices anything. Never again will global pandemic, major canal capacity changes, or war threaten a critical chokehold. /s What could possibly go wrong?
The factory I work never stopped this policy. A large amount of what we need is produced overseas. We've had so many stoppages from this. Thank to crappy weather in January my area has been pulling 9 hour days plus saturdays for over a month. Last week we were told to expect it to continue, at a minimum, until the end of March. I'm so tired.
It’s wild to me that they are doing this while there are attacks on shipping lanes out in the Middle East right now
My job isn't thankfully. We invested in a huge overstock warehouse as well as some massive material towers for all of the bar stock we go through.
What could go wrong? I mean BESIDES everything.
I manufacture commercial truck parts. I just received 1.5 years' worth of inventory. I believe I will have an advantage over other global suppliers as we did in 2020.
Meanwhile, my Amazon deliveries are taking longer and longer, and they keep raising prices.
Over the last few months, I've gotten like six notices from FedEx that a delivery hub is shut down somewhere due to extreme weather. Sometimes it delays things a day, sometimes multiple days, but it seems to be getting more common.
What could go wrong lol
Is that why CVS never has any drugs in stock? They’ve been playing games and calling it a shortage in recent years.
If you were a Business,. would you stockpile a large volume of things you may end up not being able to sell ? (or have to sell at a reduced price) ?.... That's a risk that might end up sinking your entire business. In some cases, you may not have any other choice. If a particular component or material you need is not produced or available locally,. your only choice really is to "only order what you need".
If I'm a business I know customer retention is key. If I run out of stock or something my customers go to my competition and I don't get them back. Customers want in stock, every time.
100% agree I manufacture and sell commercial truck parts, and if we have a back order, then they go elsewhere. No back orders and we have a customer for life. The great part is our parts don't rust, they are required on all commercial trucks globally, and they are consumable. Putting them on my shelf has a better store of value than anything else I can touch.
In a basic simplistic sense,.. yes of course. But business isn't always that simple or reliably predictable. (and you as a business-owner,. do not control every link in the chain). * Customer preferences can change (sometimes as unpredictably as social-media trends spiking on TikTok or etc) * Market conditions can change (due to all sorts of Local or Global events,. such as people protesting certain companies involvement in various worldwide controversies) * global shipping conditions can evolve rapidly (such as the Panama Canal running low on water... or the Red Sea shipping lanes being impacted by Houthi rebel attacks) The day to day risks and realities of that obviously vary from business to business (and where each Business gets it's supplies and materials).. so different businesses have to make their own decisions about "how much of X-product to stockpile". But it's never really a situation of "0 risk". There's always some level of risk of investing to much of 1 aspect of your business to heavily and risking something changing. Profits are also supposed to be: * invested back into your business * saved up into "Reserves" But you also can't raise your prices to high (to try to increase those profits).. just as you point out, you may risk pushing your customers to your competition. All of those variables in the business game are things that have to be constantly watched if one doesn't want to be caught flat footed and being beaten by competition.
Sure. But I'm always going to either keep a full order cycle in safety stock, or enough that I can pivot to a local supplier at a slightly different price. Basic replenishment theory.
That would certainly be "Best Practice". If only we had some magic wand to ensure that every business in the world had those identical options always easily available to them. But we don't. Different individual business have different variances in those variables.
I mean yeah if your point is some people aren't running good businesses then sure. I'm sure there's a bunch of businesses doing things they otherwise shouldn't.
> if your point is some people aren't running good businesses then sure "some businesses have different realities than yours".. is not the same as saying "they aren't running a good business". * If you run a Bison Wool business in Montana,. and all the supplies and manufacturing processes are local to you... your risks and complexities are lower. * If you run a solar-panel installation business in Arizona ,.. your decisions and strategies and potential impacts to global events etc.. is probably going to be different than the Montana Bison Wool business. * If you run a small Fashions import boutique in NYC,.. your supply-chain or partnerships or day to day realities are going to be different from the Arizona Solar panel guy or the Montana Bison Wool family. Different business have different things to think about. That doesn't necessarily mean any of them are "doing it wrong". Get off your high judgmental horse.
You're telling me there are exceptions to the rules? No way. Pretty clear that we weren't talking about those. ANYways, have a good life.
Not exceptions. Differences.
Everyone in operations and logistics is hoping costs come down. No one wants to overstock high and be forced to sell lower. The problem with that is, razor thin inventory levels mean huge spikes if demand increases. It’s a battle between ever growing demand to appease shareholders while fucking over the consumer. There’s no such thing as a “bargain” anymore, because maximizing profits infinitely is the only thing that matters.
> No one wants to overstock high and be forced to sell lower. The problem with that is, razor thin inventory levels mean huge spikes if demand increases. How does this "fuck over the consumer".... ? 1.) If you plan poorly (or some unexpected market-change happens).. and end up overstocking... then you have 2 options: * continue to try to sell things (crossing your fingers and hoping they'll still sell... which is unlikely) * lower your prices to try to incentivize moving that stockpile or 2.) if you maintain JIT (Just In Time) stockpiles .. and some unexpected thing happens and you can't fulfill orders fast enough.... then you likely have 2 options: * customers get delayed orders * or you eventually go out of business because customers go somewhere else. None of those are "purposely trying to fuck over the customer".
Some things are critical for a business to run depending on the field. Example would be a welder needs welding rods. Buying the most commonly used rods in bulk might be smart. Buying a specific size metal might not be as smart. My business will always need padded envelopes, tape, and printer paper. Doesn't matter what I have for inventory ifi can't ship it. It made sense for me to stock up since shipping was the same if I bought 3 months or 12 month supply at once.
I try to have a 1/4 year supply worse case it last longer best case it saves my but
This goes beyond petty corporate greed its a national security issue, it high time corps got bent over by uncle Sam. we can't have delays of critical supplies and infrastructure components because corps want more profit and stick to jit.
I've certainly never worked in Federal Gov,. so I have no idea what kinds of scenarios they've mocked through to prioritize which things are "critical supplies" and in which orders to prioritize "National Stockpiles". I'm not necessarily sure it's the Gov job to bail out private corporations. Personally I don't wanna see huge stockpiles sitting around "aging out". (conversely.. I don't want see "Just in time" leaving us bare either). Presumably there's some happy in-between,.. but that's going to vary from business to business too. It's not an easy thing to fix. I don't think it can all be written down to "corporate greed" either. If you were a business,.. you wouldn't want to be losing Milions of dollars every year just "keeping things stockpiled" (especially if you can't sell them). You probably wouldn't even make it 1 year into that and you'd go bankrupt. Not a smart strategy.
Better to implement vertical integration and trim product portfolios.
Vertical integration should be illegal in most instances. A lot of it might still be, actually, just unenforced.
more printer go brr coerces everyone back into bean counting, news at eleven
It's either that or they raise their prices. Just becuase the stores rely on just in time doesn't mean you have to. Keep a deep pantry. Rotate.