The Black Swan

 

Maybe I think differently because I have read this?

With everything going on with the CoronaVirus, it is incredible to see how people are behaving.

Everyone and their cousin is talking about the Supply Chain, about being prepared, about not having enough capacity ... it's crazy.

I honestly wonder if the people making all of these comments have ever actually ran any operations, if they ever had to responsibility to actually get things done.

It's easy to say how prepared you can be, and what companies should have been doing, or pointing the finger saying "how could you be out of stock".

The reality is, we have a lot of choice. The average grocery store for example can easily have 15,000 to 20, 000 skus that move through their stores ... think about that for a minute. That many skus, that are all cycling through the stores on some type of regular rate of sale. 

Or let's take something that's more in people's face at the moment, toilet paper. A grocery store can have 5 to 12 different types of toilet paper available in the store. Now while that might not seem like much, compared to the overall store offering, it has an impact.

Each one of those skus of TP, has a rate of sale. There are those varieties because they are geared towards different types of customers (normally). Each of these skus has to be bought, moved, warehoused, then delivered to stores to support sales. And if you haven't been into the back of a grocery store before, there isn't exactly a wild amount of storage space. Add to this the need to still have room to move with all of the other products that are facilitated through the door.

What happened here with the CoronaVirus is a Black Swan Event.

For those of you that don't know what that is:

A black swan is a highly improbable event with three principal characteristics: It is unpredictable; it carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random, and more predictable, than it was.

By nature, you cannot plan for these types of events. Products are still flowing and there is inventory on these items that people have depleted on the shelves. What people are seeing now is simply lag in the system as people / companies are trying to rebalance what is getting to the stores and when.

We will all be fine.