Grocery shopping these days

[Alleycat72]

14 hours ago, Raoul said:

Probably a good way to get shot.....old men tend not to have much of a sense of humor.

Have been to the Publix in the Gulch? No old men. Some men that are questionable. 

[MacGyver]

1 hour ago, BHunted said:

Exactly... my point and why? We haven't had to use any more tp than normal. They expecting to have their arses explode?
You never hear any reasoning or talk about it on the news, online or otherwise... 

Up until about 6 weeks ago, America did about 40% of their pooping at work or at school. Now they're doing all that at home.

Same with eating out.  The week before March 11, Americans ate more than 50% of their meals outside of their homes.

Supply chains in America have optimized for efficiency - and they're rewarded mightily for that by shareholders.  That's the behavior they've optimized for.  @Erik88 could probably go into more detail - but those production lines at Charmin, Cottonelle, etc are running 24/7 churning product out that goes directly from the production line into trucks and straight to your local grocery store's shelf.  There's not a giant warehouse of excess toilet paper somewhere.

The kicker is, that it's going to take the supply chain some time to readjust.  They're also not going to go out and invest in new production lines - because it would be a stupid investment.  At some point you're going back to work and that capacity would be wasted.

The interesting detail in all of this is what's become of the commercial toilet paper makers - the Georgia Pacifics of the world.  They have plenty of product - but it's not in a form that consumers usually consume.  It's rougher and usually packaged in single rolls shipped inside giant boxes. They don't have the relationships with grocery stores to get it onto shelves - because most of the time the consumer isn't going to want it.

Uline - one of the major commercial distributors has all you could possibly want right now: https://www.uline.com/BL_1106/Toilet-Tissue-and-Dispensers

I've noticed some more enterprising restaurants using their ability to simply up their regular order of toilet paper to make available to their customers.

Toilet paper, meat, PPE - we're seeing where the assumptions built into the normal operation of supply chains and logistics really break down. The free market doesn't really care if you live or die. At the same time - it should be recognized that it's only because of the "essential" folks like @Chucktshoes driving the trucks that continue the illusion of normalcy in these strange times.

You can look at all of this in one of two ways.  Either, you can look at our supply chains as a marvel of modern efficiency and financial engineering.  Or, you can look at it and realize that this whole facade has duct tape and bailing wire holding it together in some key places. Actually, both can be true at once.

 

[Chucktshoes]

8 minutes ago, MacGyver said:

Up until about 6 weeks ago, America did about 40% of their pooping at work or at school. Now they're doing all that at home.

Same with eating out.  The week before March 11, Americans ate more than 50% of their meals outside of their homes.

Supply chains in America have optimized for efficiency - and they're rewarded mightily for that by shareholders.  That's the behavior they've optimized for.  Eric88 could probably go into more detail - but those production lines at Charmin, Cottonelle, etc are running 24/7 churning product out to go directly into trucks and into your local grocery store.  There's not a giant warehouse of excess toilet paper somewhere.

The kicker is, that it's going to take the supply chain some time to readjust.  They're also not going to go out and invest in new production lines - because it would be a stupid investment.  At some point you're going back to work and that capacity would be wasted.

The interesting detail in all of this is what's become of the commercial toilet paper makers - the Georgia Pacifics of the world.  They have plenty of product - but it's not in a form that consumers usually consume.  It's rougher and usually packaged in single rolls shipped inside giant boxes. They don't have the relationships with grocery stores to get it onto shelves - because most of the time the consumer isn't going to want it.

Uline - one of the major commercial distributors has all you could possibly want right now: https://www.uline.com/BL_1106/Toilet-Tissue-and-Dispensers

I've noticed some more enterprising restaurants using their ability to simply up their regular order of toilet paper to make available to their customers.

Toilet paper, meat, PPE - we're seeing where the assumptions built into the normal operation of supply chains and logistics really break down. The free market doesn't really care if you live or die. At the same time - it should be recognized that it's only because of the "essential" folks like @Chucktshoes driving the trucks that continue the illusion of normalcy in these strange times.

You can look at all of this in one of two ways.  Either, you can look at our supply chains as a marvel of modern efficiency and financial engineering.  Or, you can look at it and realize that this whole facade has duct tape and bailing wire holding it together in some key places. Actually, both can be true at once.

 

The bolded portion is the money quote here folks. Our supply chain is built on a Just In Time logistics model. It is wholly inadequate to handle sudden surges in demand or interruptions due to acts of God. There aren’t warehouses to hold supplies of stuff, the warehouse have just enough room in them to hold a few days to a week’s worth of stock. We get taught this lesson every time there is a natural disaster of any type, but just as soon as we clean up the mess and get caught up, we ignore the lessons we learned and go back to business as normal. 

[peejman]

3 minutes ago, Chucktshoes said:

The bolded portion is the money quote here folks. Our supply chain is built on a Just In Time logistics model. It is wholly inadequate to handle sudden surges in demand or interruptions due to acts of God. There aren’t warehouses to hold supplies of stuff, the warehouse have just enough room in them to hold a few days to a week’s worth of stock. We get taught this lesson every time there is a natural disaster of any type, but just as soon as we clean up the mess and get caught up, we ignore the lessons we learned and go back to business as normal. 

Exactly. JIT isn't applicable to everything. Business schools teach one thing, how to run a widget factory. If your factory makes widgets and demand rarely changes, the method they learned works fine and you don't need any inventory.

When you don't make widgets, demand is variable, and some items have long lead times, having some stock of hard to get things can save you lots if pain down the road. But they're not taught to think that way. Month to month is about as good as it gets. And this is why I disagree with the bailouts to some degree. Businesses must be allowed to fail, even big ones. It's the only way they'll learn. 

I like to say we don't have a 5 year plan, or even a 5 month plan. We have a 5 hour plan. We have production meetings twice a day, and there's about 5 hours of useful work that gets done between them. Its absurd. 

[MacGyver]

3 minutes ago, peejman said:

Exactly. JIT isn't applicable to everything. Business schools teach one thing, how to run a widget factory. If your factory makes widgets and demand rarely changes, the method they learned works fine and you don't need any inventory.

When you don't make widgets, demand is variable, and some items have long lead times, having some stock of hard to get things can save you lots if pain down the road. But they're not taught to think that way. Month to month is about as good as it gets. And this is why I disagree with the bailouts to some degree. Businesses must be allowed to fail, even big ones. It's the only way they'll learn. 

I like to say we don't have a 5 year plan, or even a 5 month plan. We have a 5 hour plan. We have production meetings twice a day, and there's about 5 hours of useful work that gets done between them. Its absurd. 

The free market really only works when failure is an option.  We've removed a lot of the risk associated with failure once you're big enough.

The thing that really galls me in so many of these cases is that we're actually rewarding the people who made the poor decisions in the first place - and in doing so incentivizing the same behavior in the future.

[deerslayer]

I have TP and 55 gr FMJ for anyone who can hook me up with a black market barber

[Ronald_55]

3 minutes ago, deerslayer said:

I have TP and 55 gr FMJ for anyone who can hook me up with a black market barber

I have some Wahl clippers. Depending on the amount I might make a house call. Am I trained and licensed....well...

[deerslayer]

12 minutes ago, MacGyver said:

The thing that really galls me in so many of these cases is that we're actually rewarding the people who made the poor decisions in the first place - and in doing so incentivizing the same behavior in the future.

But are all these decisions that poor?  They may run the way they do because it is the only way to remain competitive and stay afloat.  

[deerslayer]

1 minute ago, Ronald_55 said:

I have some Wahl clippers. Depending on the amount I might make a house call. Am I trained and licensed....well...

My wife wants to give it a try, but is worried she may botch trimming the Pomeranian and is scared to trim him.  I see where I stand...

[Chucktshoes]

7 minutes ago, deerslayer said:

I have TP and 55 gr FMJ for anyone who can hook me up with a black market barber

I got my hair cut yesterday here in Dyersburg. Feels so good. 

[MacGyver]

Just now, deerslayer said:

But are all these decisions that poor?  They may run the way they do because it is the only way to remain competitive and stay afloat.  

Yeah, any case study in any business school would say they were good decisions.

Here's basically where we are in 2020.  Let's say I walk into a boardroom with a big pile of cash that our business has made.  A big pile - let's say a $7 trillion dollar pile. And I ask the board what they want to do with that money - we could invest in new factories, we could acquire competitors, better benefits for workers, whatever - maybe some combination of the above.

But, since my board is filled with 'investors' - who really want to take money off the table and "invest" in some other stuff - they see my big pile of money and my suggestions and say, "what if we gave a chunk of that money back to shareholders?" "We could do a share buyback and make everybody's investment more valuable."

That hypothetical $7 trillion is the amount of share buybacks that the S&P 500 has undertaken since 2009. Put it another way - it's more than 90 cents of every dollar in profit they've made.

I'm not saying it's right or wrong - that's just where we are right now.

So, look at another example. We bailed the airlines out after September 11th. We bailed them out in 2009. We just gave them another $50 billion bailout. But, since 2009 - they've spent 96% of their free cash flow on buybacks.

They could have their own rainy day fund well funded. But that's not where the money has gone. It's gone straight into the pockets of their majority shareholders - knowing that the taxpayers will dump another big pile of cash into their coffers when it's needed because they're "too big to fail."

There are a lot of ways to address this problem.  I could list a bunch that would be palatable to people of different political tastes.

Unfortunately we don't seem to have an appetite for any of it.  And so here we are.

 

 

[Erik88]

1 hour ago, MacGyver said:

There's not a giant warehouse of excess toilet paper somewhere.

That's correct. Up until March there was, to an extent. Kimberly Clark has DC's and production sites all over the country. Fun fact, some of their TP is made in Loudon TN. But from what I'm told, those are all empty now and the mills are running 24/7. It's probably going from the production line directly to a waiting truck. 

34 minutes ago, deerslayer said:

I have TP and 55 gr FMJ for anyone who can hook me up with a black market barber

I'm actually exchanging text messages with a girl that's going to come cut my hair at my house. I'm pumped.

12 minutes ago, MacGyver said:

 We bailed the airlines out after September 11th. We bailed them out in 2009. We just gave them another $50 billion bailout. But, since 2009 - they've spent 96% of their free cash flow on buybacks.

They could have their own rainy day fund well funded. But that's not where the money has gone. It's gone straight into the pockets of their majority shareholders - knowing that the taxpayers will dump another big pile of cash into their coffers when it's needed because they're "too big to fail."

I'm still fuming over this. I just read that United is already announcing layoffs even though they took a bailout. I was confused by this, as I thought one of the rules is that they had to keep people on the payroll. I looked into it more and saw they only have to employ people through September and the layoffs start October. I again want to mention that they are not even required to pay back most of the money. It was free, tax payer funds. Why the hell did we bail them out if they are still going to let go a substantial number of employees. I really don't get it. They should be required to pay back every penny, with interest. Instead we just have them a giant wad of cash and they still get to fire people. 

[deerslayer]

54 minutes ago, MacGyver said:

Yeah, any case study in any business school would say they were good decisions.

Here's basically where we are in 2020.  Let's say I walk into a boardroom with a big pile of cash that our business has made.  A big pile - let's say a $7 trillion dollar pile. And I ask the board what they want to do with that money - we could invest in new factories, we could acquire competitors, better benefits for workers, whatever - maybe some combination of the above.

But, since my board is filled with 'investors' - who really want to take money off the table and "invest" in some other stuff - they see my big pile of money and my suggestions and say, "what if we gave a chunk of that money back to shareholders?" "We could do a share buyback and make everybody's investment more valuable."

That hypothetical $7 trillion is the amount of share buybacks that the S&P 500 has undertaken since 2009. Put it another way - it's more than 90 cents of every dollar in profit they've made.

I'm not saying it's right or wrong - that's just where we are right now.

So, look at another example. We bailed the airlines out after September 11th. We bailed them out in 2009. We just gave them another $50 billion bailout. But, since 2009 - they've spent 96% of their free cash flow on buybacks.

They could have their own rainy day fund well funded. But that's not where the money has gone. It's gone straight into the pockets of their majority shareholders - knowing that the taxpayers will dump another big pile of cash into their coffers when it's needed because they're "too big to fail."

There are a lot of ways to address this problem.  I could list a bunch that would be palatable to people of different political tastes.

Unfortunately we don't seem to have an appetite for any of it.  And so here we are.

 

 

I wonder how the IRS would view big fat rainy day cash funds. 

I was not arguing for more bailouts for airlines.  I do question how those who are not manufacturers expect manufacturers to maintain profit and competitiveness (and therefore stay in business) if they are to abandon their JIT business model and adopt a “we are gonna set aside a huge stack of inventory just cuz” plan.  We demand low prices and JIT helps achieve them.  I doubt the people grumbling about JIT would readily accept the resulting much higher prices required to maintain the emergency stockplies people are apparently expecting. 

Edited May 7, 2020 by deerslayer

[peejman]

1 hour ago, MacGyver said:

The free market really only works when failure is an option.  We've removed a lot of the risk associated with failure once you're big enough.

The thing that really galls me in so many of these cases is that we're actually rewarding the people who made the poor decisions in the first place - and in doing so incentivizing the same behavior in the future.

The worst part is that none of them would agree that they made poor decisions.  They're just doing what they've been taught, that's how you run a business in America. And it's not their money or livelihood at stake.  Their golden parachute is secure, so even if it did fail, their personal loss is minimal. Most of these CEO types have zero personal motivation beyond power and influence. They're a contractor, a hired gun. Win or lose, they're richly rewarded. 

[Chucktshoes]

37 minutes ago, deerslayer said:

I wonder how the IRS would view big fat rainy day cash funds. 

I was not arguing for more bailouts for airlines.  I do question how those who are not manufacturers expect manufacturers to maintain profit and competitiveness (and therefore stay in business) if they are to abandon their JIT business model and adopt a “we are gonna set aside a huge stack of inventory just cuz” plan.  We demand low prices and JIT helps achieve them.  I doubt the people grumbling about JIT would readily accept the resulting much higher prices required to maintain the emergency stockplies people are apparently expecting. 

The folks here doing the most grumbling about the razor thin margins of JIT are mostly in the logistics sector pointing out the weaknesses we see in it while acknowledging the benefits it holds for short term profitability. It shouldn’t be a zero sum game, but prioritizing quarterly profits over longer term financial health has made it such. 
 

[DaveTN]

4 hours ago, MacGyver said:

The kicker is, that it's going to take the supply chain some time to readjust.  They're also not going to go out and invest in new production lines - because it would be a stupid investment.  At some point you're going back to work and that capacity would be wasted.

That’s what happened with ammo. You can’t justify the capital expenditures when you know they will drop back to normal.

However, I don’t know, but I would guess these companies that are producing PPE’s and Ventilators are getting funds from the Feds for those expenditures??

[Erich]

Dupe...cant delete

Edited May 7, 2020 by Erich

[Erich]

Dupe

Edited May 7, 2020 by Erich

[Erich]

5 hours ago, Erik88 said:

The same reason people started hoarding ammo. Fear. Once word got out that people were hoarding toilet paper it became something we all had to have because everyone else was doing it. 

 

Anecdotally that feels like most of the problem. Had fear been contained (whether they got it from the media or are just that way), any BM behavior shift and supply chain stress would not have had shelves running dry. Or at least not when they did or would have.

No doubt current supply chain stress and personal behavior with folks staying home are factors, but I question the shortage timing from what I have seen. 

Granted a bit anecdotal and probably varies by area (doubt any real numbers are published?),  but the meat at our local grocery stores looks to have seen fear based depletion vs supply chain (which is now part of the problem with processing plant shutdowns). We went from nothing to nearly fully stocked with the butcher areas open once the supply chain caught up the first wave of fear subsided. BUT a key piece to me, Signs posted on limits were all removed, which says they were told the supply chain is good. Then the stories of meat plants shutting down and predictions of meat shortages....the parking lots were notably busier and within 2-3 days we are back to nothing. And my wife told me how the ladies at here work were talking about how they were all running down to buy up meat as they had read the articles. 

My recollection on TP  around here was it was cleaned out before many moved to working form home or stay at home orders were adopted in high volume. The media from the beginning threw out there would be shortages and the stories of hoarding with pics of baskets piled high followed, as did ebay adds for $80 rolls of TP. Not sure one one determines how many bowl movements have moved from public to personal commodes, but I'd venture to say many wont use public toilets unless its absolutely necessary. And TP is the thing you can most live without at home as there are many alternatives, while that is not true of public facilities in the US.

The irrational ammo shortages and new gun buyers kinda speaks for itself. Fear makes folks do some crazy things. And that is the one that most makes me shake my head. I understand concern about not being able to feed your family. But thinking you're going to be having to have gun battles with neighbors or zombies....not so much.

[MacGyver]

30 minutes ago, DaveTN said:

That’s what happened with ammo. You can’t justify the capital expenditures when you know they will drop back to normal.

However, I don’t know, but I would guess these companies that are producing PPE’s and Ventilators are getting funds from the Feds for those expenditures??

They are. 

Companies that are procuring PPE (and that's what most of it is - middle men trying to leverage existing relationships in China to get product) are making a bunch of money.  Your home state of Illinois gave a check for $3 million to a guy in a McDonalds parking lot to try to get some masks before they went to a higher bidder.

But, even with the government paying - the typical business school model isn't going to support building new lines.  Because when this is done - you'll have excess capacity and shareholders wanting blood for spending money that could have gone into their pockets.

Now, I would fully support something I think you'd agree with - and that is building capacity to make critical PPE onshore here in the US. But, you're going to have to pay for that somehow - and this is a case where the market probably isn't going respond appropriately.

To any company - masks or gowns or whatever are essentially fungible commodities. That is, they're going to consume them from wherever they're cheapest regardless of the origin. They'd be hugely penalized for building at higher cost here what they could simply buy somewhere else.

To get it balanced out - you're going to have to have the government declaring it critical, and entering into a long term contract to get them produced here - probably at a higher marginal cost than in China.

Problem is, the market simply isn't going to correct for times like this where there is a spike in demand - and "oh we've sent all of this offshore with our blessing because it looked cheaper." They're too short sighted - or rather - they don't care. You're going to have to have someone step in and say, "no, we need to retain some of this capacity here."

 

 

[Chucktshoes]

58 minutes ago, MacGyver said:

They are. 

Companies that are procuring PPE (and that's what most of it is - middle men trying to leverage existing relationships in China to get product) are making a bunch of money.  Your home state of Illinois gave a check for $3 million to a guy in a McDonalds parking lot to try to get some masks before they went to a higher bidder.

But, even with the government paying - the typical business school model isn't going to support building new lines.  Because when this is done - you'll have excess capacity and shareholders wanting blood for spending money that could have gone into their pockets.

Now, I would fully support something I think you'd agree with - and that is building capacity to make critical PPE onshore here in the US. But, you're going to have to pay for that somehow - and this is a case where the market probably isn't going respond appropriately.

To any company - masks or gowns or whatever are essentially fungible commodities. That is, they're going to consume them from wherever they're cheapest regardless of the origin. They'd be hugely penalized for building at higher cost here what they could simply buy somewhere else.

To get it balanced out - you're going to have to have the government declaring it critical, and entering into a long term contract to get them produced here - probably at a higher marginal cost than in China.

Problem is, the market simply isn't going to correct for times like this where there is a spike in demand - and "oh we've sent all of this offshore with our blessing because it looked cheaper." They're too short sighted - or rather - they don't care. You're going to have to have someone step in and say, "no, we need to retain some of this capacity here."

 

 

Which brings us full circle to btq6r’s talk of making offshore production punitively non-viable through the tax code. 

[MacGyver]

1 minute ago, Chucktshoes said:

Which brings us full circle to btq6r’s talk of making offshore production punitively non-viable through the tax code. 

As labor costs in China go up, among other things, you’re starting to see some of this happen already - especially with smaller companies.

Unless you’re huge like Apple and can really exert control on your supply chain - you’re simply at their mercy.  And you’ve got no clout.

Add in transport costs, shipping times at sea, and port delays - and you’ve got a bunch of firms deciding it’s just not worth it.

There are certainly a bunch of ways to skin a cat - but I’d argue that when corporate CEOs who make tens of millions of dollars annually pay less taxes than I do - people are going to notice. 

[superduty]

8 hours ago, Garufa said:

I think where people are taking their dumps might have something to do with it as well.  Think of all those people who did their business at work who are now doing it at home, or kids formerly at school, or any others that choose to use public facilities.  Those are all sources of TP that often come from something other than the regular retail supply chain.  Now, more folks are having to buy their own, or at least more of it, from regular stores.

This.

[DaveTN]

4 hours ago, MacGyver said:

To get it balanced out - you're going to have to have the government declaring it critical, and entering into a long term contract to get them produced here - probably at a higher marginal cost than in China.

I would assume that is what is going to happen. They said it was Trumps fault there weren’t millions of masks or tens of thousands of ventilators available from a Federal warehouse somewhere.

So since they are getting blamed for it, I would suspect this administration has ordered ridiculous amounts of those items. Masks have a shelf life and I would assume ventilators have a technology life. So this should be some lucrative contracts for products that may never be used.