RPF0581-Understanding_Why_Money_Doesnt_Work_Sometimes_OR_Understanding_Just-In-Time_Inventory_Management
00:00:00.000 | ♪ Blessing in the mornin' ♪
00:00:03.000 | ♪ Come back Sunday morning ♪
00:00:05.000 | California's top casino and entertainment destination
00:00:08.000 | is now your California to Vegas connection.
00:00:11.000 | Play at Yamava Resort and Casino at San Manuel
00:00:14.000 | to earn points, rewards, and complimentary experiences
00:00:17.000 | for the iconic Palms Casino Resort in Las Vegas.
00:00:21.000 | ♪ We got the store to sell ♪
00:00:23.000 | Two destinations, one loyalty card.
00:00:26.000 | Visit yamava.com/palms to discover more.
00:00:30.000 | Welcome to Radical Personal Finance,
00:00:32.000 | a show dedicated to providing you with the knowledge,
00:00:34.000 | skills, insight, and encouragement you need
00:00:36.000 | to live a rich and meaningful life now
00:00:38.000 | while building a plan for financial freedom
00:00:40.000 | in 10 years or less.
00:00:42.000 | My name is Joshua. I am your host.
00:00:44.000 | And today we're going to continue with our
00:00:46.000 | September National Preparedness Month series
00:00:49.000 | with a discussion of just-in-time inventory management.
00:00:52.000 | I'm going to let a fellow podcaster of mine
00:00:55.000 | carry the bulk of this discussion,
00:00:58.000 | but I want to share with you a brief introduction.
00:01:01.000 | One of the major tenets that I have firmly established
00:01:05.000 | in my own mind and have sought to share with you
00:01:09.000 | is simply this.
00:01:11.000 | Money is one of your most valuable resources.
00:01:16.000 | And most of the time, money will be the first thing
00:01:20.000 | that you will turn to in a crisis.
00:01:23.000 | After all, money is simply the most marketable
00:01:26.000 | commodity in the world, and money can buy you
00:01:29.000 | solutions to a huge majority of your problems.
00:01:35.000 | So considering money really should always be
00:01:39.000 | one of our first steps with regard to preparedness,
00:01:42.000 | making sure that we have money, have lots of money,
00:01:46.000 | and have lots of money available when we need it.
00:01:51.000 | But that doesn't mean that we can then
00:01:53.000 | automatically ignore the times when money doesn't work.
00:01:58.000 | Because when money doesn't work,
00:02:02.000 | no amount of money will get you out of the problem.
00:02:05.000 | No amount of money will solve the problem.
00:02:08.000 | You have to think about those things in advance.
00:02:12.000 | Let me give a couple of examples to spur
00:02:15.000 | your thinking on this subject and try to
00:02:17.000 | drive my point home to a visceral level for you.
00:02:21.000 | Let's assume that you are concerned about your physical safety.
00:02:25.000 | You should be concerned about your physical safety.
00:02:28.000 | And because you're a practical and prudent person,
00:02:30.000 | you recognize that one of the benefits of being wealthy
00:02:33.000 | is you can avoid most of the circumstances
00:02:36.000 | where you would become physically unsafe.
00:02:39.000 | You don't have to live in the hood where you're
00:02:41.000 | worried about a drive-by shooting putting some
00:02:43.000 | random bullet through your bed, as many people worry about.
00:02:47.000 | You choose to live in an upscale neighborhood.
00:02:50.000 | You don't have to worry about being accosted by security guards.
00:02:54.000 | Rather, you make sure that you pay to have security guards around you,
00:02:58.000 | whether that's as simple as your neighborhood and development's
00:03:03.000 | front gate security guard or whether that's your own private security.
00:03:08.000 | You pay for good windows that lock,
00:03:12.000 | strong doors that are hard to kick in.
00:03:15.000 | You purchase a quality automobile and you studiously ignore
00:03:19.000 | or excuse me, you studiously avoid going into the bad parts of town
00:03:23.000 | where you would be subject to increased physical risk.
00:03:28.000 | That's all good.
00:03:30.000 | And money is the best way for you to increase
00:03:33.000 | your physical security in all of those areas.
00:03:37.000 | But what happens when, through no fault of your own,
00:03:41.000 | you're face to face with an attacker who wants to cause you physical harm?
00:03:48.000 | All of a sudden, if that security guard is not right beside you,
00:03:51.000 | the money doesn't solve your problem.
00:03:55.000 | You don't need money in that circumstance.
00:03:58.000 | You need a good pair of running shoes and a gun.
00:04:03.000 | Those two things will probably solve your problem more effectively
00:04:07.000 | than you waving your wallet at somebody.
00:04:11.000 | But that's not to say that the money didn't go a long way towards solving the problem.
00:04:15.000 | It did. It just solved the problem until it stopped working.
00:04:21.000 | I think that to say that money can't buy you increased physical security would be wrong.
00:04:29.000 | Given the examples I've just shared with you,
00:04:31.000 | it should be obvious that you can spend money wisely
00:04:35.000 | and significantly improve the physical security you enjoy.
00:04:39.000 | But to say that money can solve all of the problems of physical security
00:04:43.000 | would also be wrong.
00:04:45.000 | Because there are times at which waving your wallet simply doesn't work.
00:04:51.000 | You need to be able to run or shoot.
00:04:56.000 | Now, we could go into almost any area of life and see this same theme brought again and again.
00:05:04.000 | Let's go to a more mundane topic.
00:05:06.000 | Let's say that you are concerned about your transportation.
00:05:10.000 | Well, one of the things that poor people often have to encounter
00:05:14.000 | is the fact that they frequently drive unreliable transportation
00:05:17.000 | and they frequently get left on the side of the road.
00:05:21.000 | This is a real problem.
00:05:23.000 | And one of the benefits of not being poor
00:05:26.000 | is you can use money to upgrade the reliability of your transportation.
00:05:33.000 | But does money solve all problems with your transportation?
00:05:37.000 | You can purchase a newer car.
00:05:39.000 | You can afford to maintain your car meticulously.
00:05:43.000 | You can make sure that you keep that car working well.
00:05:46.000 | You can spend money on driving classes and learn how to drive the car well.
00:05:51.000 | And that car will probably work really well
00:05:54.000 | and for the most part keep you completely out of trouble.
00:05:59.000 | You can also spend money to buy a cell phone
00:06:02.000 | that will enable you to call a tow truck if you have a problem.
00:06:05.000 | You can set aside emergency funds to be able to pay for that tow truck
00:06:09.000 | or purchase a membership to a roadside assistance program
00:06:12.000 | so that you can be easily and inexpensively towed when your car breaks down.
00:06:17.000 | Those things are all true.
00:06:19.000 | Those things are all important.
00:06:21.000 | But that doesn't mean that you shouldn't still consider
00:06:24.000 | the importance of knowing how to change your tire
00:06:27.000 | or knowing how to do some basic automotive troubleshooting
00:06:31.000 | so that if you're driving over the mountain pass
00:06:33.000 | out of range of the cell phone signal
00:06:35.000 | and all of a sudden your car stops working
00:06:37.000 | and it's late at night and there's a snowstorm coming on,
00:06:40.000 | then you can't apply just a modicum of common sense and skills
00:06:44.000 | to get yourself back on the road.
00:06:47.000 | Money works really, really well until it doesn't.
00:06:52.000 | Now, let's bring it to the things that we use every day.
00:06:57.000 | One of the best ways to get all the things that you need
00:07:01.000 | is to buy them.
00:07:04.000 | And most of us are so fortunate and blessed to live in places
00:07:08.000 | where anything you want is available to you,
00:07:13.000 | shipped very quickly to your house,
00:07:16.000 | stocked all the time on the store shelves.
00:07:19.000 | And we increasingly don't even worry about our access to physical goods
00:07:23.000 | because they're everywhere and they're easily available
00:07:26.000 | and they're inexpensive.
00:07:28.000 | We are so blessed to live in a world
00:07:31.000 | where anything we want is available at our fingertips
00:07:34.000 | at a very, very reasonable price.
00:07:39.000 | And money is the best way to have those things,
00:07:41.000 | which is why we talk continually about how to get a good deal,
00:07:44.000 | how to save money, how to make sure that you get those things that you need.
00:07:48.000 | But what happens if the thing that you want to buy is not available?
00:07:57.000 | You say, "Well, I would just need to pay more money."
00:07:59.000 | That's true, which is why you should always have more money
00:08:02.000 | because when you have more money, you can pay a higher price,
00:08:04.000 | and if you pay a higher price, more things will become available to you.
00:08:07.000 | But there can come times, many times,
00:08:10.000 | when something is simply not available.
00:08:14.000 | So how do you protect yourself from that?
00:08:17.000 | You've got to consider it in advance,
00:08:19.000 | and you've got to make sure that you stockpile
00:08:22.000 | the thing that you might need so that you have it
00:08:28.000 | when that thing is no longer available to you.
00:08:33.000 | This is rather obvious.
00:08:34.000 | It's so obvious that when I explain it,
00:08:36.000 | I kind of feel a little bit foolish because everybody knows this.
00:08:40.000 | But it's the same principle as making sure that you fill up your car with gas
00:08:46.000 | when you're about to head over a long stretch of road
00:08:49.000 | where there are no facilities and no gas stations.
00:08:52.000 | It's as simple and as obvious as making sure you have a backup battery with you
00:08:56.000 | to keep your cell phone charged when you know you're going to be away
00:08:59.000 | from all of your normal chargers.
00:09:01.000 | But yet the same thing applies to some of the other more mundane things of life,
00:09:07.000 | like food, like water, like medical supplies.
00:09:15.000 | Have you ever noticed that when a snowstorm is headed your way
00:09:17.000 | or a hurricane is headed your way that all of a sudden the stores get wiped out?
00:09:21.000 | And have you ever wondered why that is?
00:09:25.000 | Well, that's what the audio that I'm about to share with you explains very effectively.
00:09:32.000 | Now, I want to be very clear.
00:09:37.000 | There's no sense of arguing about whether it's right or wrong or good or bad.
00:09:42.000 | I am thankful for just-in-time inventory management,
00:09:46.000 | and I am constantly amazed at how we get continually better and better.
00:09:52.000 | I should say, rather than we, I should say the people who are engaging in inventory management
00:09:56.000 | get better and better and better at being able to pivot quickly
00:10:00.000 | and provide the goods and services that we need.
00:10:04.000 | But that still means you need to understand a potential problem in your life,
00:10:09.000 | a problem that might not be able to be solved with money,
00:10:12.000 | because after all, as I have previously discussed in Radical Personal Finance,
00:10:15.000 | if somebody, an entrepreneur comes in and wants to offer you goods at a higher price
00:10:19.000 | because you want to solve your problem with money, of course,
00:10:22.000 | they would be excoriated for that and would face some sort of criminal charge
00:10:27.000 | if they are found guilty of so-called price gouging.
00:10:30.000 | That rant can be found in episode 478 called "The Utility and Morality of Price Gouging,"
00:10:39.000 | if you are interested in that conversation.
00:10:41.000 | Enough preamble. Enjoy this audio of Aaron's show called "In the Rabbit Hole,"
00:10:47.000 | a modern urban survival podcast.
00:10:49.000 | He does an excellent job with this topic, and I hope you enjoy it and find it thought-provoking.
00:10:54.000 | And now, the survival show that once survived using rubber dog due to illustrate the fall of society.
00:11:02.000 | It's Summer Shorts time once again.
00:11:05.000 | In this short, we discuss the hidden mechanism of society putting people at risk.
00:11:11.000 | Howdy and welcome to "In the Rabbit Hole's" urban survival podcast.
00:11:16.000 | This is episode number 257.
00:11:19.000 | I'm your host Aaron, and you are in the rabbit hole.
00:11:23.000 | Safe and sound.
00:11:26.000 | [music]
00:11:33.000 | Weird summer short for you today.
00:11:35.000 | I say weird because almost no one really talks about this,
00:11:39.000 | but it is a major weak point in society today.
00:11:43.000 | Weak because of fragility.
00:11:46.000 | I have to warn you, this might be a little boring at first.
00:11:50.000 | We're going to talk about inventory strategy.
00:11:53.000 | Or this might be really exciting if operations inefficiency blows hot air up your skirt.
00:11:59.000 | Sexy, I know.
00:12:01.000 | This inventory strategy has produced a really large benefit for developed nations.
00:12:07.000 | It's lowered costs of things you buy every day.
00:12:10.000 | Hey, who doesn't like that? I want to pay less for things.
00:12:13.000 | And that's kind of what this does for everyone involved.
00:12:16.000 | And it's meant store shelves are rarely empty.
00:12:20.000 | You know, as a prepper, we kind of tend to notice those things.
00:12:23.000 | And that's nice.
00:12:24.000 | That's in my lifetime.
00:12:26.000 | I'm in my early 40s.
00:12:28.000 | My generation, we don't really remember seeing empty store shelves for any reasons.
00:12:33.000 | Like you'd go somewhere random and yeah, you'll see a shelf that's kind of empty here or there or whatever.
00:12:38.000 | But you go to the grocery store or you go really to most major box stores and supply is always there.
00:12:46.000 | It's on the shelf.
00:12:47.000 | You pick one up, you walk out.
00:12:48.000 | It's pretty rare that you go in and they don't have what you're looking for.
00:12:54.000 | This strategy that we're going to talk about today is called just in time inventory.
00:12:59.000 | I know even the name is getting getting people hot, right?
00:13:03.000 | It's just in time inventory.
00:13:04.000 | This is so exciting.
00:13:06.000 | That's where it'll be interesting here.
00:13:08.000 | What is just in time inventory?
00:13:11.000 | Just in time inventory or JIT is a lot of people will write it out is an inventory strategy.
00:13:17.000 | Companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs.
00:13:26.000 | Wow, that was that was fun.
00:13:28.000 | Basically, what that means in a nutshell, and we'll unpack it some more here in a second.
00:13:33.000 | But what that means in a nutshell is goods do not hit your loading dock.
00:13:38.000 | If you are a pretend you're a store owner for a moment and you're using just in time inventory.
00:13:43.000 | Goods do not hit your shipping dock in the back to be received until right before the very last one on your shelf sells.
00:13:52.000 | So the last one on your shelf starts to walk out the front door and fresh supply comes in the back door.
00:13:59.000 | That is, in essence, what just in time inventory aims to do.
00:14:05.000 | Let's unpack this a bit more.
00:14:08.000 | Why is this such a big deal?
00:14:10.000 | You know, it's like, all right, well, it sounds cool, but why is this a big deal?
00:14:13.000 | Well, inventory is expensive.
00:14:16.000 | It's I would say in a lot of ways, it's typically the the top one of the top two expenses you have in a business and one of the top two liabilities and such you have in a business or depending on how you're putting it in what column.
00:14:28.000 | Yeah, whatever.
00:14:29.000 | Anyway, there is the initial cost of inventory, obviously.
00:14:33.000 | And then there are the nerdy operation costs.
00:14:36.000 | Every cubic foot of your facilities, the building your business is in costs you money.
00:14:41.000 | That cost is assigned to the inventory occupying that cubic foot.
00:14:46.000 | I know there's like sort of math getting involved here, but don't worry, we won't get too deep in the weeds.
00:14:51.000 | What costs?
00:14:53.000 | Glad you asked.
00:14:54.000 | We'll summarize a bit with just two examples here so we don't get too deep into the weeds.
00:14:59.000 | Utilities gets averaged out over every cubic foot.
00:15:03.000 | That would be one.
00:15:04.000 | Insurance gets averaged out over every cubic foot.
00:15:07.000 | That's the insurance you have on the building.
00:15:09.000 | That's the insurance you have.
00:15:11.000 | If somebody walks in your front door and oops, trips and sues you or whatever, there's, you know, all kinds of different expenses there.
00:15:19.000 | But that's just to say utilities and insurance to keep it clean.
00:15:22.000 | That stuff gets averaged out over every cubic foot in your building.
00:15:25.000 | Yes, cubic foot.
00:15:26.000 | We'll talk about that in a second.
00:15:28.000 | And and then that goes into the cost of your goods over the length of time that your goods are in there.
00:15:33.000 | Your eyes are starting to roll back in your head.
00:15:35.000 | Stay with me.
00:15:36.000 | Stay with me.
00:15:37.000 | Why cubic foot?
00:15:38.000 | Why not square foot?
00:15:39.000 | I'm used to thinking about square foot.
00:15:40.000 | Well, your building occupies more than square feet.
00:15:43.000 | Like you have an extraordinarily weird building, in which case I would love to see a picture of that.
00:15:48.000 | That's that's really weird.
00:15:49.000 | But anyway, cubic foot.
00:15:50.000 | So your building has what link width and height, you know, X, Y and Z axis.
00:15:56.000 | You got to use it all in large warehouses.
00:15:59.000 | You stack things up. So counting square footage doesn't really give you a true estimate of how much these things cost.
00:16:07.000 | So you cubic foot.
00:16:08.000 | Anyway, we'll get off that.
00:16:10.000 | You also have to factor in time, as I alluded to a moment ago.
00:16:14.000 | Longer inventory occupies a cubic foot, the lower your profit on the inventory when you finally sell it.
00:16:21.000 | In other words, if a blue widget is sitting there long enough, even though you sold it, you still don't make money on it.
00:16:29.000 | In fact, you may have actually lost money on it regardless because it sucked up too many expenses while it lived there.
00:16:37.000 | I'll give you a really funny illustration.
00:16:39.000 | You're going to love this and a really weird story about me.
00:16:42.000 | But anyway, about 14 years ago, I was working for the company my family used to own.
00:16:47.000 | It was a retail costume and theatrical supply company.
00:16:52.000 | I know you've learned the weirdest things about Aaron on the show.
00:16:55.000 | In fact, it was actually the largest privately owned in the country in the retail space.
00:17:01.000 | Specifically, the warehouse was something like four hundred and fifty thousand cubic feet.
00:17:06.000 | And it also happened to be an absolute disaster where where this story begins.
00:17:12.000 | Anyway, it was such a cluster, the warehouse operations were causing problems in my department that I had found it and ran.
00:17:20.000 | So I took over control of the warehouse for a year to rework the entire thing.
00:17:25.000 | I mean, I had to learn all about logistics and materials handling and all kinds of other stuff I wish I didn't know about.
00:17:30.000 | But anyway, this included a physically taking every single thing off of these two story pallet racks and reorganizing everything and and doing the accounting involved.
00:17:41.000 | And all of this and bin sorting and where, yeah, it starts to get really eyes roll back in your head.
00:17:48.000 | You would not believe the crap I found almost literally the crap I found 15 years before this exciting little adventure.
00:17:58.000 | My father had purchased a few pallets.
00:18:01.000 | Yes, pallets of rubber dog doo doo.
00:18:04.000 | Again, this is a costume and theatrical supply shop that's been around at that point for like 60 years.
00:18:11.000 | So rubber dog doo doo in the context makes total sense.
00:18:14.000 | The vendor offered my father like this really crazy good deal if he would just buy a shit ton of rubber dog doo doo.
00:18:23.000 | But the market tastes in what gags people thought were funny or not shifted.
00:18:30.000 | People don't think rubber dog doo doo is that funny anymore.
00:18:33.000 | And listen, you're listening to this show and I say rubber dog doo doo for like 100 time and you're like, oh, it's funny.
00:18:38.000 | But anyway, the inventory sat being picked at for the next 15 years, but we still had a crap ton of it.
00:18:47.000 | Yes, I'm beating the crap out of those puns today.
00:18:50.000 | When we took the original purchase price length of time and cost per cubic foot, we were now losing money on all this rubber dog doo doo.
00:19:00.000 | And we were losing on opportunity costs of the inventory taking up the cubic footage that could have been used for something else, a product that actually would have been moving and would have been making money.
00:19:11.000 | The craziest thing was after all the accounting was done, all the math and all of it was actually more beneficial for us to throw away most of these pallets of rubber dog doo doo, write it off and use that space for another product that was more productive.
00:19:27.000 | This is what careful controls and just in time inventory is there to prevent in many ways, not specifically rub dog doo doo, but it does apply to rubber dog doo doo too.
00:19:38.000 | Had there been real inventory controls in place, somebody would have said, hey, that rubber dog, the trends are kind of going down and the supply demand.
00:19:46.000 | Yeah, don't buy pallets of rubber dog doo doo.
00:19:50.000 | It's while funny, not not really productive.
00:19:54.000 | Next part of the equation.
00:19:56.000 | You usually as a store and usually buy inventory on what's called net 15 or net 30.
00:20:02.000 | That means you take delivery of the inventory and have 15 to 30 days to send payment to the dealer or manufacturer.
00:20:09.000 | Now a clock is ticking.
00:20:10.000 | Financially speaking, you try to sell through and replenish as close to the net period as possible.
00:20:17.000 | Again, this goes back to you want the one product on your on the front of your store walking up to the register or out the door just as the new supply is coming in the back door and on its way to be replenished.
00:20:31.000 | So you only keep on hand what you can sell through order, take delivery of in the time it takes to completely run out.
00:20:40.000 | If you run out, this is all really this is actually all important.
00:20:43.000 | I know, but stay with me.
00:20:46.000 | If you run out, if the shelf goes empty, this is what it does to a store.
00:20:50.000 | You lose possible sales and create an opening for a customer to begin a relationship with your competitor.
00:20:56.000 | They've already started the relationship where they chose you over your competitor, but now you're basically telling them, no, sorry, we don't want your business go away.
00:21:04.000 | It's a big and careful dance you have to do.
00:21:07.000 | The bigger your company, the more complex this gets and the more elaborate will say the dance becomes.
00:21:16.000 | Grocery stores.
00:21:17.000 | Now we get to the interesting part.
00:21:19.000 | Grocery stores are special, though.
00:21:22.000 | Their time gets crunched further down than anyone else's and at least anyone else I can think of.
00:21:29.000 | And really, the grocery store part's the only one we really care about in this instance.
00:21:33.000 | You have spoilage to contend with me, on the other hand, a couple of ballots of rubber dog to do that stuff's basically like it's going to outlast me in whatever land.
00:21:44.000 | Let's hit now.
00:21:45.000 | But, you know, bananas, not so much.
00:21:49.000 | In simple terms, there are two types of spoilage without getting super deep into the weeds.
00:21:54.000 | There's real spoilage and then there's perceived spoilage or consumer behavior.
00:21:59.000 | Real spoilage.
00:22:01.000 | You get it.
00:22:02.000 | If the banana goes bad before the grocery store can sell it, they have to throw it out.
00:22:06.000 | They completely lose their money on it.
00:22:08.000 | And then some because they have all these other costs that, you know, the bean counters in the back are wrapping into it.
00:22:14.000 | But there's bad.
00:22:16.000 | And then there's perceived spoilage.
00:22:19.000 | We'll use my wife as an example because, you know, she loves it when I do that kind of thing.
00:22:23.000 | Jen will not touch a banana that has any brown spots on it.
00:22:27.000 | Nope, none, not a zilch.
00:22:29.000 | Forget it.
00:22:30.000 | Get that thing away from me.
00:22:31.000 | I'm not talking about the bruises on the meat of the banana, the soft, gooey.
00:22:35.000 | And it's kind of a little weird.
00:22:37.000 | She will not eat a banana even speckled with brown spots on the peel.
00:22:43.000 | We all have our little ways, as my grandmother used to say.
00:22:47.000 | But my wife is not alone.
00:22:49.000 | This is becoming very common because we live in a society sold on expiration dates and we've become a bunch of germaphobes.
00:22:58.000 | And this is impacting the way we treat our own personal produce inventories.
00:23:03.000 | We'll see.
00:23:04.000 | You know, you think of your pantry.
00:23:05.000 | That is your produce inventories.
00:23:07.000 | That is your your private grocery store, if you will.
00:23:11.000 | We'll come back to this in a moment.
00:23:13.000 | Grocery stores want to keep it as close to 24 hours as they can get away with.
00:23:17.000 | If they could shave even more without disrupting shoppers that are there actively shopping, they would.
00:23:24.000 | And in some cases, they kind of do.
00:23:26.000 | But staying out of the weeds sounds pretty slick, right?
00:23:30.000 | Everything very efficient machines and dancing and ballet and all the accounting numbers in the correct column and money saved.
00:23:38.000 | And savings then reflected in lower consumer goods.
00:23:42.000 | We crank down and the cycle goes on.
00:23:44.000 | Progress.
00:23:46.000 | Here's where it gets freaky, boys and girls.
00:23:50.000 | What happens when there is a disruption to the system?
00:23:55.000 | What happens when there is, say, a random spike in consumer demand way above normal, something the system cannot account for, cannot cope with?
00:24:07.000 | What happens when there is a stoppage in the transportation and delivery in that logistics line between where it got made and where the back door that it gets delivered to?
00:24:19.000 | The shelves go empty.
00:24:21.000 | If it gets bad, they stay empty.
00:24:25.000 | Then we get another fun wrinkle.
00:24:28.000 | Yes, I know the excitement doesn't stop there.
00:24:30.000 | Human behavior.
00:24:31.000 | People see something they're not used to seeing anymore.
00:24:35.000 | Empty shelves.
00:24:37.000 | Now I remember why Aaron was talking about his.
00:24:39.000 | Yeah, OK.
00:24:40.000 | So they freak out.
00:24:41.000 | Then the local news sees an opportunity, a story with elicit and exciting, strong human emotion.
00:24:49.000 | Then the news hypes it and stirs it and everyone gets even more excited.
00:24:53.000 | But wait, there's more.
00:24:55.000 | Now we get a second human behavior involved.
00:24:58.000 | People go nuts when they can't have something or when they think something when when they're about to experience the loss of opportunity.
00:25:06.000 | People will often be convinced they want something simply because there is a threat.
00:25:12.000 | The thing is going away, whether it actually goes away or not doesn't really have anything to do with anything.
00:25:18.000 | It's just, oh, my God, it's going to go away.
00:25:20.000 | And we all know a perfect example of this, don't we?
00:25:23.000 | What happens every time there are any rumblings about AR-15s going away, at least anywhere most of us kind of believe it.
00:25:30.000 | Oh, yeah, they're coming after it this time.
00:25:33.000 | People who never, ever wanted one before walk into your local gun shop and say, give me one of them.
00:25:39.000 | There are 15s and news talking about.
00:25:42.000 | And they'll pay way above normal, right?
00:25:45.000 | Now you've created a situation where people are panicked.
00:25:49.000 | Emotions are pumping.
00:25:51.000 | They'll buy crap just to buy crap, even if they don't need it.
00:25:55.000 | Or even if they have plenty and them buying more interrupts somebody else.
00:26:04.000 | We're human beings.
00:26:05.000 | We don't care.
00:26:06.000 | You know, whatever.
00:26:08.000 | I need more bread.
00:26:09.000 | I need more milk, whatever.
00:26:11.000 | And they'll continue straining the supply chain for longer than would be logical.
00:26:17.000 | Eventually, this usually sorts itself out in Houston here and in the Gulf Coast.
00:26:21.000 | We see this with gas stations.
00:26:22.000 | You know, there's hurricane warning.
00:26:24.000 | Everybody, you know, the closer we get to the hurricane, the longer the lines get at the gas stations.
00:26:28.000 | And as soon as the hurricane pass, most people pretty much have a full day.
00:26:33.000 | They rush to the gas station to go after gas again because the news told us, oh, everybody's hitting the gas stations.
00:26:39.000 | Yeah.
00:26:40.000 | So, but again, what happens if things are a little more hinky?
00:26:47.000 | What if the disruption goes on for longer than a few days?
00:26:51.000 | Now, now we're getting somewhere interesting.
00:26:54.000 | And for many of you, some, some key pins of this lock are about to go into place.
00:26:59.000 | Like why this has been such a big deal and not often really talked about in this depth, why this is such a big deal.
00:27:06.000 | Most people are reported to have less than 72 hours of food on hand in their own personal grocery store, their pantry.
00:27:15.000 | Right.
00:27:16.000 | And then you have the weirdos who use their ovens to store sweaters and their refrigerators to store their tennis shoe collection.
00:27:23.000 | But there is a downward pressure creating a personal just in time system at home.
00:27:30.000 | As I mentioned earlier and said, we'd come back to the 72 hour personal inventory.
00:27:35.000 | Number is said to be going down because this is my, because society is getting lulled into expecting stuff to always be there and always be plentiful.
00:27:49.000 | Also, because of just in time inventory, as we discussed earlier, that's why we went through all that long thing to help you understand that that is just in time.
00:27:57.000 | Inventory was the back door as the person in front of you that wanted the thing is walking out with the last one.
00:28:02.000 | The fresh one is coming in. And so we don't, at least in developed nations that are non-communist, you know, kind of places.
00:28:12.000 | There is this flow of goods.
00:28:15.000 | Plus, the store is just around the corner, right?
00:28:19.000 | And then there's grocery delivery starting to catch up.
00:28:21.000 | Oh, this is great. I hate going to the grocery store.
00:28:25.000 | And so you don't even have to go to the grocery store anymore.
00:28:28.000 | And in a lot of places just order it up on an app. You don't even have to talk to a human being.
00:28:33.000 | Just order it up on an app, two thumbs and away you go.
00:28:36.000 | Somebody will bring it to you.
00:28:38.000 | Or there's plenty of grocery stores that just have a, you know, order it and we'll have it out.
00:28:44.000 | And basically I drive through saying, go through. Yeah, it's my stuff. Give me, give me my stuff.
00:28:49.000 | Modern society is getting sucked into depending on an inventory strategy that is very fragile.
00:28:56.000 | There are many weak points of failure here.
00:28:59.000 | There's transportation, there's tons and tons of stuff.
00:29:04.000 | And then on top of the real issues with logistics, we also add on top of that human behavior.
00:29:12.000 | Because again, human beings are rational creatures with the capacity for logic.
00:29:17.000 | We are not logical beings with the capacity for motion.
00:29:20.000 | We do, in other words, crazy bananas.
00:29:24.000 | This is dangerous. And this is why we prepare.
00:29:27.000 | Here's what to do with this information.
00:29:30.000 | Don't let your pantry turn into a mini just-in-time inventory grocery store.
00:29:36.000 | Have enough food on hand for a minimum of 10 days.
00:29:39.000 | Then work on expanding that to however long makes you feel comfortable.
00:29:44.000 | In other words, prepare JICJIT goes SHFT.
00:29:50.000 | And that's what I think about that.
00:29:53.000 | I hope you had fun today. I know this is a longer short than I really meant to.
00:29:57.000 | It was kind of one of those things that started working on the outline and I was like, I just got so much to say about this.
00:30:01.000 | But anyway, it's a longer summer short. And with that, we roll out.
00:30:07.000 | Show notes, resources and other things can be found by going to intherabbithole.com/e257.
00:30:16.000 | With that, we wrap up episode number 257 from the Lone Star State.
00:30:23.000 | Till next time, stay safe and sound.
00:30:27.000 | [Music]
00:30:52.000 | Sweet Hop is an online marketplace curating the best in premium seating at stadiums, arenas and amphitheaters nationwide.
00:30:59.000 | With Sweet Hop's 100% ticket guarantee, no hidden fees and the personal high-level service you expect with a premium purchase.
00:31:06.000 | You can relax knowing you'll receive the luxury experience you deserve.
00:31:10.000 | Visit SweetHop.com today to book your premium tickets to your favorite teams, artists and all the must-see live events to Sweet Hop Around LA.
00:31:18.000 | S-U-I-T-E-H-O-P dot com. It's more than just a ticket.