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  • Brett Spurr

Supply Chains, Part 2- The Bucket

Here's a better way to think of the supply chain for food and staples:

Imagine a bucket in your sink about half full. There's a hole in the bucket (representing the flow of consumption). But the faucet is on and filling the bucket at the same rate as water comes out so it stays about half full. The water in the bucket is inventory.

Now, someone knocks the bucket spilling most of the accumulated water- the shelves are empty because the inventory has been drawn down or "over consumed" temporarily. Notice that water is still flowing into the bucket at the same rate its flowing out.

The nation can still produce goods in the quantities needed except that the inventory is in people's pantry's rather than on the shelves. When will the bucket fill back up? Not until the faucet it turned on a bit more and the hole is plugged just a bit do we get a reasonable fill. This happens naturally because you can only store so much TP and the freezer is full. So people start to use up the pantry and buy a little less- the bucket slowly fills. But not everyone stocked up yet, so whatever hits the bucket is going to get sucked right back out FOR NOW.

Fortunately, there is an endless flow from the faucet. How long til normal? Depends on the just how many people try to stock up and how long people feel it necessary to stay stockpiled. I'd guess the rush is almost over and we'll start back towards equilibrium. It may take weeks, perhaps a month or two. Remember, production = consumption. Production has not been compromised. This is a temporary drawdown of inventory, that is all.

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