I N T H E T REN CHES
By Allen McBroom I miss the Chinese buffet in our town. The place is still open, but with a menu instead of a buffet — and it’s still good food — but ordering from the menu lacks some of the pleasure I got from staring at steam tables filled with tempting goodies. Stuffed mushrooms. Salt and pepper chicken. Sweet and sour anything. Sushi. Today’s article is also not a buffet, it’s a menu, and today’s menu has four offerings, which are patience, supply diversification, supply and demand, and optimism. Your server will get your drink orders while you make your selection. You may not speak Latin, but you might be familiar with the phrase “Maxima enim, patientia virtus,” or its rough English translation: “Patience is a virtue.” In the rare moments when I’ve been accused of being virtuous, it probably had nothing to do with patience. I’ve had the opportunity in the past couple of months to be more virtuous in my patience, and while I know it’s good for my character, I’m weary of being patient. Guitars I ordered three weeks ago haven’t been shipped yet. Stock orders that used to take four days from order to delivery now routinely take two weeks. Despite all the patience I’ve gained recently, I’ve got one customer who has earned sainthood for her patience. We’ll call her Theresa. Theresa (who is in San Ramon, Calif.) ordered a TV stand from us (we’re in Mississippi) on May 15. We shipped it via the post office on May 16, and it arrived in Oakland on May 17. That’s 34
PATIENCE, SUPPLY DIVERSIFICATION, SUPPLY AND DEMAND, AND OPTIMISM
pretty great, I think. Mississippi to Oakland in one day. Then it gets weird. Three weeks later, the TV stand still isn’t there. Tracking says it’s been in Sacramento three times, Chico three times, Redding once, and a few other places, and each time the package is “on track to its destination.” Theresa has been very kind and patient, and even left a good review for us based on our efforts to get the item to her. When I feel myself becoming impatient with our supply chain, I guess I need to utter my new mantra: “Be Patient, and Be Theresa.” When I get around to building a shrine to our customers, Theresa will be the first one to get a statue in a place of honor. Speaking of supply chains, today’s category is “diversification.” We’ve talked about diversifying our supply sources in the past, and the COVID-19 experience has shown how critical that is to health of a business. Getting everything from one supplier is the same as having all your eggs in one basket. If the basket falls apart, you’re in trouble. Got one cable source? Research other sources, and see if other suppliers offer some security your old standby supplier cannot. The same idea applies to anything your business relies upon as part of your revenue streams. Got only one case supplier, or accessory supplier, or (fill in the blank)? We’ve just learned how fragile the supply chain can be, so having multiple sources for your products is pretty dang important. Not sure where to diversify first? Just recall what you’ve been out of in the last few months, and that’s where you start. Everyone reading this understands supply and demand. When there’s plenty of something or little demand, the price goes down. When there is a demand but a scarce supply, the price goes up. The contracting side of our business has seen this repeatedly. Everyone is streaming these days, so video streaming gear now demands a premium. One particular device my partner has used in video setups was an affordable $299 in February, and in May it couldn’t be found for less than $549. The device is the same, but the supply is down, and the demand is up. I was looking last week for a particular webcam to use at home for Skype or Zoom with my kids. In February, that model was selling online for $50 to $60 all day long. In May, that same model was bringing $179 to the lucky merchants who had one to sell. So, what does this mean to MI retailers? It means that you’d better have a good relationship with your suppliers, and not be limited to only one source if other options exist. Make sure you can contact your supplier’s rep even if the regular lines of communications are down. And if shipping has slowed, or the supply-side labor force is reduced for some reason beyond anyone’s control, you’d better have the patience required to hang in there until things get better. Speaking of things getting better, let’s discuss optimism in general, and the Airplane Relative Health Index (ARHI) in particular. If you’re not familiar with the ARHI, it’s a critical component of assessing the relative health of the economy, and I made it up last night. JULY 2020
