How to shop during a crisis

Summary

Podcast Summary: The Indicator from Planet Money – "How to Shop During a Crisis"

Introduction: Understanding Panic Buying Amidst Crisis

In the November 19, 2024 episode of The Indicator from Planet Money, hosts Adrian Ma and Steven Masaha delve into the phenomenon of panic buying that has gripped America in the wake of a recent dock worker strike. This disruption has halted ports along the East Coast and South, leading consumers to fear shortages of essential goods, including the perennial favorite, toilet paper.

The Impact of Supply Chain Disruptions

Adrian Ma opens the discussion by highlighting the surge in panic buying:

“[00:12] Adrian Ma: It's a well known fact that Americans love to shop.”

Steven Masaha emphasizes the chaos such disruptions can cause:

“[00:21] Steven Masaha: Panic buying now. Panic buying. Lots of panicking.”

The strike's effect on supply chains triggered anxiety among shoppers, who began raiding stores to stockpile essentials. This behavior, while understandable, often exacerbates the very shortages consumers fear.

Insights from Supply Chain Expertise

To shed light on navigating shopping during crises, Ma and Masaha consult with Terry Esper, a professor specializing in logistics and supply chain management at Ohio State University. Esper provides a foundational understanding of the pivotal role logisticians play in maintaining the flow of goods from manufacturers to consumers.

Esper shares his passion for the field, recounting an interaction aimed at recruiting a new logistics student:

“[02:44] Terry Esper: I was trying to recruit him back into studying logistics. He was like, wow, yeah, this is really interesting.”

He likens logisticians to the WD-40 of the economy, ensuring that supply chains operate smoothly and efficiently:

“[03:13] Steven Masaha: Yeah, and you can think of logisticians as the WD40 for our economy. They make sure the supply chain, from raw goods to factories to store shelves, moves as smoothly as possible.”

Strategies for Calm and Informed Shopping

Esper advocates for a proactive and informed approach to shopping during crises. Instead of succumbing to panic, consumers are encouraged to adopt a strategic mindset by asking themselves critical questions before making purchases:

1. Is the product domestically made?

   Esper explains that many essential items, like toilet paper, are produced domestically, reducing the risk of shortages due to international shipping disruptions:

   “[04:16] Adrian Ma: For example, in the case of a global trade disruption, like the dock workers strike that we just saw, the first question to ask is, is what I want to buy made domestically?”

2. Is the product imported?

   For items that rely on international supply chains, such as perishable goods and pharmaceuticals, consumers should be more cautious:

   “[05:01] Steven Masaha: So instead of running the paper aisle, you should run to the seafood aisle.”

3. How much do you actually need?

   Avoid excessive stockpiling by assessing real needs. Esper advises against hoarding large quantities, as logisticians are typically prepared to replenish supplies:

   “[07:50] Adrian Ma: And this brings us to the final question to ask yourself. How much do you actually need?”

The Evolution from "Just in Time" to "Just in Case"

The pandemic exposed vulnerabilities in the "just in time" inventory model, where companies kept minimal stock to reduce costs. In response, many have shifted to a "just in case" approach, maintaining buffer inventories to better withstand disruptions:

“[06:05] Steven Masaha: But Terry says companies still remember the sting of how just in time bit them. When the pandemic threw off that timing and led to shortages, he says that meant we've seen a swing from just in time to just in case.”

Limitations and Real-World Exceptions

While logistic teams work diligently to mitigate disruptions, unexpected events like natural disasters can still cause significant shortages. For instance, Hurricane Helene's destruction of an IV fluid facility in North Carolina led to an ongoing shortage, underscoring that not all disruptions can be anticipated or managed seamlessly:

“[08:26] Steven Masaha: But you know, for all the praising we're giving to logisticians right now, they do have their limits. If a natural disaster hits somewhere that's a major supplier of a vital product, well, that's a problem like when Hurricane Helene destroyed a major IV fluid facility in North Carolina.”

Conclusion: Empowering Consumers Through Knowledge

The episode wraps up by reiterating the importance of informed decision-making during crises. By focusing on domestically produced goods, understanding the nature of supply chain disruptions, and purchasing only what is necessary, consumers can contribute to stabilizing store inventories and reducing panic-induced shortages.

Esper sums up the optimistic outlook for logistics professionals:

“[09:26] Terry Esper: That's where the logisticians with our cape will swoop in and save the day. Right? Give us the opportunity to save the day.”

Final Thoughts

The Indicator from Planet Money successfully demystifies the complexities of supply chain management, offering listeners practical strategies to navigate shopping during uncertain times. By highlighting the critical role of logisticians and empowering consumers with knowledge, the podcast episode serves as a valuable guide for anyone looking to shop wisely amidst a crisis.

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Notable Quotes with Timestamps:

• “[00:12] Adrian Ma: It's a well known fact that Americans love to shop.”
• “[03:13] Steven Masaha: Yeah, and you can think of logisticians as the WD40 for our economy.”
• “[04:16] Adrian Ma: ...is what I want to buy made domestically?”
• “[07:50] Adrian Ma: How much do you actually need?”
• “[09:26] Terry Esper: That's where the logisticians with our cape will swoop in and save the day.”

Transcript

[Adrian Ma]

It's a well known fact that Americans love to shop.

[Steven Masaha]

We're just not always very good at it.

[Terry Esper]

Panic buying is spreading across America.

[Adrian Ma]

Panic buying in full swing Thursday morning.

[Steven Masaha]

Panic buying now. Panic buying. Lots of panicking. So. And that was caused by a dock worker strike last month that shut down ports along the east coast and South. And some shoppers responded by raiding stores. They were afraid the closed ports would mean a shortage of essentials, including the king of essentials, toilet paper.

[Corey Bridges]

Shelves empty at some stores.

[Adrian Ma]

Look, we get it. Port strikes, pandemics, hurricanes, these are all scary things that can lead to panic. And it can be hard to know what will and won't be on store shelves when they happen.

[Steven Masaha]

And that's why the indicator has your back.

[Adrian Ma]

This is the indicator from Planet Money. I'm Adrian Ma.

[Steven Masaha]

And I'm Steven Masaha from the Gulf States newsroom. Today we're going to talk to a supply chain superhero about how to shop no matter what's the latest crisis, nodding up the supply chain.

[Adrian Ma]

So keep calm and keep listening.

[N/A]

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[Adrian Ma]

To be the guide in our Shopper's Guide, we got Terry Esper. He's a professor researching logistics and supply chain management at Ohio State University. And he actually gave us a 101 a few years back on what logisticians do.

[Steven Masaha]

And Terry made it sound like he almost moved you from Logistics 101 to a new Major.

[Terry Esper]

I was trying to recruit him back into studying logistics. He was like, wow, yeah, this is really interesting. And I'm like, well, hey, man, come on back. We'd love to have you at Ohio State, but I couldn't appeal to him.

[Steven Masaha]

So never stop recruiting.

[Terry Esper]

Always be closing, as they say.

[Steven Masaha]

So you have him in moonlighting as a logistician on the side here?

[Adrian Ma]

Not yet, but honestly, Terry makes a very persuasive case.

[Steven Masaha]

Yeah, and you can think of logisticians as the WD40 for our economy. They make sure the supply chain, from raw goods to factories to store shelves, moves as smoothly as possible.

[Adrian Ma]

And while it might be easy to imagine a logistics professor getting judgy about panic buyers, Terry actually saw the latest shopping spree as a good thing.

[Steven Masaha]

So you are pro panic buying to an extent.

[Terry Esper]

Let me not say I'm pro panic buying, but I am pro consumers making the link between. There's something happening in logistics. Oh, that could affect my daily life. Like, I am very much pro that.

[Adrian Ma]

So to be clear, panic buying is not a good thing. It can create shortages or worsen the ones that got people panicking in the first place.

[Steven Masaha]

So to avoid that, we got our crisis buyers guide, which honestly is less a catalog of products to buy or skip and more of a mindset, a series of questions to ask before running to the store or filling your online shopping cart.

[Adrian Ma]

For example, in the case of a global trade disruption, like the dock workers strike that we just saw, the first question to ask is, is what I want to buy made domestically? Because if it's not being imported from some other country, in most cases, there's nothing to worry about.

[Steven Masaha]

And this lets us kick a big panic buying purchase out of our shopping carts. I'm talking toilet paper.

[Terry Esper]

The companies that typically manufacture most of the brands of toilet paper that we buy in this country, they all pretty much manufacture that product here in the.

[Adrian Ma]

U.S. terry says when it comes to global trade disruptions, you should still save most of your worries for the products that we do import, and that includes a lot of perishable goods.

[Terry Esper]

We're talking things like fresh fruit, fresh fish.

[Steven Masaha]

So instead of running the paper aisle, you should run to the seafood aisle.

[Terry Esper]

That's definitely something to take into consideration.

[Adrian Ma]

Another item to keep an eye on when we're talking global shipping issues is medicine.

[Terry Esper]

Pharmaceuticals is one of those product areas that I actually advise people to maybe watch a bit, because a lot of pharmaceutical product and even the active ingredients in pharmaceuticals, a lot of that product is imported.

[Adrian Ma]

But at the same time, Terry Says hold off on the panicking.

[Terry Esper]

Here's the thing. Most pharma companies have roughly around 180 days of inventory on hand, six months.

[Adrian Ma]

Of inventory, which, when you think about it, is kind of a contradictory approach to the way a lot of companies operated before the pandemic. Right. You might have heard of this thing in logistics called the just in time economy. This idea that companies should have goods and materials show up at stores and factories just when they're needed. Right. No more, no less. And they shouldn't have a lot of extra supply just laying around.

[Steven Masaha]

But Terry says companies still remember the sting of how just in time bit them. When the pandemic threw off that timing and led to shortages, he says that meant we've seen a swing from just in time to just in case.

[Terry Esper]

Most companies have, you know, really taken a different approach to be much more proactive about making sure that they keep inventory within and across their supply chains.

[Steven Masaha]

This also gets us to the next question you should ask before panicking.

[Terry Esper]

Is it something that was sudden or something that was foreseeable?

[Adrian Ma]

Case in point, it is actually possible that the dock workers could go on strike again. They only have a temporary agreement that lasts until mid January, and if negotiations fall apart, another strike could ensue. But companies have time to prepare.

[Terry Esper]

Every company that I engage with, they're watching what's happening with that port situation and they are buffering their inventories and they're preparing for it in many, many ways.

[Steven Masaha]

So have faith in the logisticians for this one.

[Terry Esper]

Have faith in the logistician.

[Adrian Ma]

Yes, of course, not every supply chain disruption comes with a warning months or weeks in advance. Right. We have been hearing about these lately in the form of natural disasters like a hurricane.

[Steven Masaha]

Yeah. And this is a scenario where Terry says toilet paper actually makes a bit more sense to add to your shopping.

[Terry Esper]

List if you have a big family and you don't know how long it's going to be before you'll be able to get your hands on a replenishment that makes sense. And so for that reason, I think that, you know, it's a fine line between when it becomes maybe a bit more of a panic buy and when we're just making good decisions to prepare our families for a contained and prayerfully short lived interruption in getting access to products.

[Adrian Ma]

And this brings us to the final question to ask yourself. How much do you actually need? Because chances are it's probably not a month's supply of toilet paper. Terry says that's because logisticians still have your Back with a little help from meteorologists.

[Terry Esper]

A lot of people that study meteorology go to work for corporations and really work at modeling and predicting where there might be potential weather issues. So if you're talking about a company like a Walmart, they're moving inventory closer to those areas to be prepared to replenish after the weather event.

[Steven Masaha]

But you know, for all the praising we're giving to logisticians right now, they do have their limits. If a natural disaster hits somewhere that's a major supplier of a vital product, well, that's a problem like when Hurricane Helene destroyed a major IV fluid facility in North Carolina. We're still dealing with an IV shortage because of that. Still, Terry says disruptions like that are the exception that average shoppers shouldn't worry too much about.

[Adrian Ma]

To summarize our guide, if we're dealing with a global shipping disruption like a port strike, you can leave anything domestically made off your prepper list, right?

[Steven Masaha]

And if it's something exported, check to see how long people have known about the upcoming crisis. Because there's a good chance companies have been building up their rainy day inventory.

[Adrian Ma]

And while it might be a good idea to stock up a little before a bad storm, do not buy every roll of toilet paper because logisticians are already at work making sure the next TP ship on the way.

[Terry Esper]

That's where the logisticians with our cape will swoop in and save the day. Right? Give us the opportunity to save the day.

[Adrian Ma]

Terry Esper, logistics superhero. Stephen, this actually reminds me, last time we interviewed Terry, we actually made a movie trailer for a logistician action movie.

[Steven Masaha]

Oh yeah, I already got the popcorn popping.

[Corey Bridges]

In a world where shipping is slow to a crawl, we're in. Stock levels don't equal on sh. Availability. Who can create order from chaos?

[Steven Masaha]

Is anyone here a supply chain manager?

[N/A]

I am.

[Corey Bridges]

In theaters this fall. It's the logistician.

[Steven Masaha]

As Hollywood called it all since that trailer.

[Terry Esper]

Ah, yeah, I'm ready, man, you know, staying ready.

[Adrian Ma]

This episode is produced and fact checked by Corey Bridges with engineering by Neil Rauch. Kagan Cannon is our editor and the indicator is a production of npr.

[Terry Esper]

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[N/A]

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