Friday, December 17, 2010

Out of Stock


"I foresaw that, in time, it would please God to supply me with bread. And yet here I was perplexed again, for I neither knew how to grind or make meal of my corn, or indeed how to clean it and part it; nor, if made into meal, how to make bread of it; and if how to make it, yet I knew not how to bake it. These things being added to my desire of having a good quantity for store, and to secure a constant supply, I resolved not to taste any of this crop but to preserve it all for seed against the next season; and in the meantime to employ all my study and hours of working to accomplish this great work of providing myself with corn and bread. It might be truly said, that now I worked for my bread. I believe few people have thought much upon the strange multitude of little things necessary in the providing, producing, curing, dressing, making, and finishing this one article of bread." - Daniel Defoe (1661–1731), Robinson Crusoe

There are many things we take for granted and rely upon and never dream could possibly fail us. For example, access to your money in the bank. Last month, one of Australia's largest banks, National Australia Bank, encountered a corrupted computer file that jammed its payment system, hitting customers from a range of banks who rely on the NAB to process payments including Citibank and HSBC. Anxious NAB customers discovered online that their November paycheck has been "rubbed out" and their account credited with nothing. "Property deals were being put on hold, car sales suspended, wages not transferred, and direct debit payments for mortgages and bills stopped"

Or consider the Robinson Crusoe quote at top. What if your regional grocery stores ran out of bread (and most everything else) for a week or more? The post, The Truth About Your Local Grocery Store, describes the Just in Time (JIT) inventory system and its impact during disasters. "Twenty or even ten years ago we stored tons of merchandise in the back room and restocked throughout the day." But now stores carry just enough stock to cover normal demands and rely on supply trucks
Most stores get 2 to 5 trucks a day of some type of food.  Thus the store you shop at each day/week really only has about 1-½ to 2 days worth of food on the shelf any given day during normal conditions.  If an emergency happens they will be cleaned out in a matter of hours.  Then the question becomes how they will restock.  Remember roads may be closed.  The warehouse workers who normally load the trucks may have situations where they don’t show up to work due to taking care of their own family.  The same would be true with the truck drivers who would bring it to the stores and the folks who stock and run the local store as well.
If an emergency affects only a very local area then stores may get back in stock within 2-3 days on basic supplies. However if a large region is impacted, such as half a state, then the regional warehouses run out fast and supplies must be trucked in from great distances. Roads between the store and the warehouses may be impassible or damaged. Connecting bridges may have to pass inspection and be cleared as safe before trucks are allowed to cross.

Bottom Line

Regional warehouses stock common items for normal usage levels. They do not have stockpiles of chainsaws, gas cans, and other speciality items that everyone will want after a disaster. Even common items like batteries or bottled water will see an explosion of demand over normal levels that warehouses can not meet. A store may look well stocked with 60 propane bottles for camp stoves on the self but consider, an ice store or blizzard is announced with power outages likely so customers rush in and want 2 bottles each. On average big box stores see 3,000 to 6,000 customers each day. So if just 10% of customers need propane, that means 300 to 600 people need 600 to 1200 bottles with just 60 in stock. Only the first 30 customers will be satisfied assuming there are no hoarders that buy up 10 bottles or the entire stock. Picture your worst experience shopping for Black Friday specials and now ramp that up since the items are now "essential" as opposed to nice-to-have.

Consider also, how will you pay for things if you can find them? The ATMs are down, credit cards won't work so it's cash or personal checks (if the store will accept checks). How much cash do you have on hand to buy things in an emergency? Keep small bills like ones, tens and twenties (not $100s).  When stores reopen they may not have access to change from a bank as they normally do and will be unable or unwilling to give change for $100s.

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