While many worldwide are adjusting to the new normal of social distancing, remote work, or, in many sad cases, not working at all, we should take stock of the millions of daily miracles that continue in spite of the coronavirus crisis.
No, I’m not not talking about the heroic medical and scientific efforts to treat and prevent this new and highly-contagious disease.
I’m talking about the millions of transactions occurring daily amidst a virtually global economic shutdown, allowing consumers to acquire goods they need today and tomorrow.
And I’m talking specifically about the miracle of inventory: the stock of products ready (or nearly ready) to be placed onto store shelves for you and me to buy.
Inventory is something we ignore during normal times. But, with the world taking a break from much of our regular production, the products that we buy are, in many cases, coming out of the stock that manufacturers and retailers have accumulated over the past few weeks and sometimes even months.
Imagine, for example, the new Apple TV you recently bought to binge Schitt’s Creek on Netflix (something I highly recommend). That unit that you bought at curbside from Best Buy in late March may have been manufactured in China in early January (before widespread factory shutdowns), sold to the retailer later that month, and has been waiting in a storeroom before finally making its way onto the floor or into your bag.
Continuing with the Apple example, it must be said that the world’s first $1 trillion company has a famously tight supply chain, meaning that it manages its suppliers of raw materials and manufactured products very closely. This is because inventory is not only among a company’s most valuable assets, but also, as with everything in life, it comes at a cost.
Fortune reported back in 2008:
Almost from the time he showed up at Apple, [now-CEO] Cook knew he had to pull the company out of manufacturing. He closed factories and warehouses around the world and instead established relationships with contract manufacturers. As a result, Apple’s inventory, measured by the amount of time it sat on the company’s balance sheet, quickly fell from months to days. Inventory, Cook has said, is “fundamentally evil,” and he has been known to observe that it declines in value by 1% to 2% a week in normal times, faster in tough times like the present. “You kind of want to manage it like you’re in the dairy business,” he has said. “If it gets past its freshness date, you have a problem.”
Indeed, having excess inventory of a product means that despite the fact that you’ve invested into developing and preparing it for sale, it hasn’t made you any money. This is why a corporate leader such as Cook would want to minimize the amount of time a product is just taking up space in a warehouse.
Note that Cook said that inventory is “fundamentally evil,” adding that, “in normal times” it becomes costly to a company very quickly. There are all sorts of factors that might impact the degree to which a product in inventory might decrease in value, including both exogenous (outside) factors such as the cost of money (credit and interest) and endogenous (inside) factors such as all of the other activities the company is or could be undertaking.
In our strange times, however, it seems that inventory of everything from Apple TVs to cars to perhaps some nonperishable foods might be not so evil given that our needs and wants continue to mount even as factories are shuttered and workers are being paid to stay at home.
We, as individuals living in what many call the developed world, have become so accustomed to being able to walk into a store or go online to get whatever we want. Most of us never think of every step that must happen to bring us our Amazon Prime delivery of a weighted blanket within 48 hours of ordering it from the computers in our pockets. We benefit every day from the invisible miracles of the market process that persuades people who neither know nor care for us to serve us in the ways we desire with their special talents and skills.
Economist Donald Boudreaux writes:
We take for granted that whatever we wish to pick up today at Safeway, Kroger, or Target will be available in whatever quantities we fancy. Likewise, we treat as an enduring feature of nature our ability to wander whenever we wish into a restaurant and to be served whatever menu items we order…
...Most of what constitutes our prosperity is a flow of finely coordinated activities each performed by highly specialized workers. In normal times this flow of activities is largely out of sight. It’s the daily production and delivery of soap, of toothpaste, of aspirin, and of beef, bread, beer, and blueberries. Items such as these don’t fall manna-like from the heavens onto retailers’ shelves. Nor for many goods are months’ worth of inventories lingering in warehouses idly waiting to be accessed. Every moment of every day hundreds of millions of specialists – from CEOs to accountants to factory workers to retail clerks – work to ensure that prosperity is continually produced and flowing.
So thank a grocery stock person. Thank a trucker, and thank a farmer. Don’t forget to thank doctors, nurses, scientists, janitors, and all of the others caring for the elderly, ill, and deceased.
But, once the world emerges from this crisis, do not forget to thank every person involved in bringing you the things you couldn’t imagine living without, even when the whole world seemed to stop.
And beyond that, remember that we live in a world of miraculous coordination of individuals working daily to benefit each other. It took humanity millenia to discover the institutions that make widespread prosperity possible. Yet we could choose to destroy in a moment.
A free society is a prosperous society, however imperfectly so. Guard yourself against calls to reform the world by the designs of experts of every stripe, and feel gratitude for invisible systems, processes, and ideas that allow us to serve each other without permission.
It’s only by maintaining an inventory of gratitude for others, most of whom we do not know, that we will emerge from the COVID-19 pandemic stronger and happier than ever.