Daniel Stanton, author of “Supply Chain Management for Dummies,” visited “Tucker Carlson Tonight” to discuss supply chain shortages and the potential impending economic impacts of COVID-19 on our everyday lives.
While most Americans have seen the rush on toilet paper and paper towels in response to the coronavirus sweeping the globe, it is unlikely that anyone has actually sat down to ponder the economic realities that will befall the nation and the world.
Stanton began the segment by explaining the seemingly strange phenomenon that we’re currently seeing in our grocery stores where certain items like hand sanitizer, soap, and medical supplies are perpetually out of stock.
“The thing about that is what is a supply chain? It’s a network of companies working together to give us the things that we want to buy every day,” Stanton explains.
“And most of the time, supply chains are pretty adaptable and they can change, when there are sudden shocks, it can really disrupt them. And those shocks can come on either side. They can be supply shocks, or they can be demand shocks. Really, what we are seeing right now are demand shocks. People buying a lot more of some things and what they would normally consume and buying less of some other things, and what that does is creates what we call a bullwhip effect and that amplifies upstream in the supply chain and cause all kinds of chaos.”
(Source: Fox News)
Tucker then asked what is in short supply, like “thermometers, toilet paper, the masks,” and what else Americans may need to worry about running out of, Stanton assured him that those are “very temporary problem[s]” and that people are simply panic buying because they saw someone else do it.
He also explained that in the future when the fear surrounding the coronavirus is gone, people will have an excess of certain products, like toilet paper, and the stuff on the shelves will be gathering dust.
“I’ve asked several people, ‘why on Earth are you buying toilet paper?’ ‘Because everybody else was. I was afraid if I didn’t buy some, I would be able to get any,'” he explains. “We aren’t using any more toilet paper than we normally would, so that’s going to be a short-term surge, they are going to be out of stock. Pretty soon the stores are going to be replenished, and you are going to have a bunch of toilet paper gathering dust on the shelf because people have a month’s worth of supply at home.”
Stanton suggested increasing capacity for other items that the population is using more, such as disinfectants and hospital masks. He even suggests that this surge could create more supply chains and revealed that we are at least partially “dependent on foreign manufacturing and long-distance transportation to get those supplies.”
He also noted that the demand for certain goods and services has all but disappeared.
“The other category of demand disruption is places we’ve got a complete drop in demand,” he pointed out.
“You mentioned all the cancellations of sports teams. I heard that Broadway is shutting down. You think about all the products and services that people would normally be buying as a part of travel or going to those events and now all of a sudden the demand has disappeared. Now we are going to have an excess of a lot of those things. All of that creates disruption and creates this bullwhip effect in supply chains.”
While Stanton revealed that he’s not worried about food shortages, but is more concerned about the supply disruption from China relating to “electronics, automobiles, any type of engineered manufactured product.”
“So I anticipate that there is going to be at some point in the next couple of weeks- that’s the institute of supply management just released a study where they say 75% of companies right now are experiencing some kind of supply disruption,” Stanton noted. “We are also to see that in the next couple of weeks where companies cannot make the things that we want to buy. Things like electronics and automobiles.”
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