Skip to main content

Do Those Social Media Gossipers Complaining About Inflation Know ANYTHING About BASIC Supply Chain Management?

It's really funny (and frustrating) to see all the posts on Facebook concerning inflation. "Thought leader" page Silent No More Philippines is just one of them. I couldn't help but laugh (and cringe) when they started complaining about the prices of goods increasing. Unfortunately, that page is only known for complaining since the reign of former Philippine president, Rodrigo R. Duterte and the recent reign of Philippine President Ferdinand R. Marcos Jr. Once again, I'd like to state that I didn't vote for Marcos Jr. The problem with that page isn't their criticism. The problem is that the page hardly displays solutions. In fact, recent posts that they have complained about inflation and the increase in price of Jollibee fast food makes me ask, "Do they know a thing about supply chain management?" That's why I really refuse to take advice from social media gossipers, especially in matters about economics (read here).

ScienceDirect.com

I decided to revisit some old lessons way back in 2004-2007 during my business administration years. A simple analysis of the supply chain will tell you how pricing is done. People say that the government is just using the war in Ukraine (or any factor beyond the control of the Philippines) as an excuse to have expensive gasoline. Please, it's all about the law of supply and demand. A simple supply chain management will tell you that barrels of gasoline are still transported by gasoline. If the supply of gasoline in the world market is low then the demand in the world market is high--gasoline prices ought to rise up. Subsidizing gasoline or making gasoline companies sell at a lower price than their costs is just plain bad business and economics!

Yup, you can just expect it to backfire badly on your face.

This just reminds me of the classic demand by some protesters for higher salaries, lower prices of goods, and cash handouts for everyone. The three demands are very self-defeating (read why here). The supply chain will tell you that salaries are all parts of the means of production. If the company increases the salary rate of the workers--they ought to increase the prices for products and services. If farmers are going to get a raise then the cost of rice must increase to continue giving that rate. The prices can only drop when there's an economy of scale (which fills in the supply-demand gap). Otherwise, prices must normally increase if workers are to get a higher salary.

Image by Sabrina Jiang © Investopedia 2020

Once again, do I need to display basic accounting for why demanding higher salaries while lowering the prices of goods is stupid? The supply chain really has the cost of goods sold and other expenses. All these will end up adding up to how much must be sold in order to gain a profit. The revenue is deducted from the cost of goods sold  (COGS). Every direct expense such as materials purchased will affect the final price. 

Let's think about Jollibee's current increase in prices. There are many factors why the prices will increase. It all involves expenses. If the cost of gasoline is high then naturally the materials they need will have to be priced higher. Let's say gasoline prices increase due to the world market. Jollibee must have a shipment of supplies. Think about Jollibee having longer operating hours these days. If gasoline prices are high then the cost of electricity will be high as well. Longer operating hours equals higher operating costs. It might be a complex network but it doesn't take a genius to understand it. Jollibee is a very huge company. Therefore, operating expenses will be naturally expensive. If Jollibee is to sell their food at the same prices all the time--you can expect Jollibee to shut down soon!

The same can go for whipped cream which is a basic grocery item. If there's an increase in gasoline prices then do you think the costs of transportation and power will be lower? The cost of raw materials will be higher. The cost of production will be higher. If one part of the supply chain's cost increases then logic dictates that you need to sell higher to be able to survive. It makes sense for whipped cream to nearly double its price if one (or more) component of its supply chain has an increased its cost.

These people are just there to spread gossip. That's why I refuse to take pages like Silent No More PH seriously. Whoever the administrators are, I'd like to ask them if they even bothered to see the situation beyond blaming politicians they dislike. Besides, even if Atty. Maria Leonor Gerona-Robredo won as the 17th president--the Philippines will still feel the shock. Meanwhile, if they do demand for more "economics magic"--we can guarantee that the Philippines will go from simple inflation to hyper-inflation like Venezuela. 

Labels:

Popular posts from this blog

The Irony the Philippines Starts the Christmas Season in September BUT Many Filipinos Love Last-Minute Christmas Shopping

  Uproxx As Christmas is just around the corner--I feel more stress coming in! It doesn't help when people try to use the late Andy Williams' "It's the Most Wonderful Time of the Year" to try and skip the problem. It's already known that most Filipinos love to start Christmas in September . However, the irony is that Filipinos start Christmas early but do their Christmas shopping late. If they began the Christmas Season early, shouldn't they think about what to do before December strikes?  Two years ago, I wrote a post discussing last-minute Christmas shopping . Many Filipinos tend to do last-minute Christmas shopping. They had all of November (when the Christmas sale usually begins) but why do the Christmas shopping in December ? One of the things I blame is the one-day paycheck lifestyle (see here ). It can be observed that many Filipinos never learn to prioritize more important things . One can get their stars when they see their paychecks. However, the...
Read more

Is Christmas Toxic Positivity a Cause or an Effect of the Philippines' Lack of Progress?

Lessandra When it's Christmas, it's so easy to think of the song of the late Andy Williams, "It's the Most Wonderful Time of the Year". The music itself reeks of toxic positivity,  whether one likes it or not. It's a shame, really, because December 20 was also the anniversary of Asia's Titanic, the sinking of the Doña Paz ! We live in a society that somehow never learns from its mistakes, like a person who's stuck in gambling debt, is still hoping to get rich gambling . Despite all that, Christmas toxic positivity still abounds in the Philippines. We still have a lot of ongoing bad habits, such as starting Christmas in September and then doing last-minute Christmas shopping during the week of Christmas. That's why every time I drive on the road on Christmas, I tend to shout, "Isn't it any wonder why the Philippines never improves?" The term Noche Buena has evolved over time . For some, it's simply the Christmas dinner. However, so...
Read more

Christmas Toxic Positivity May Be Your Biggest Holiday Financial Killer

Christmas is just around the corner, isn't it? It's easy to tell me, "Stop being a Scrooge! Lighten up! It's Christmas!" Some people can't tell the difference between positivity and when positivity becomes toxic . If you think about it, toxic positivity is defined as: ...the belief that people should maintain a positive mindset no matter how dire or difficult a situation is. While there are benefits to being optimistic and engaging in positive thinking, toxic positivity rejects all difficult emotions in favor of a cheerful and often falsely positive façade . Every time I talk about Christmas foolishness (read here ), it's always pointed out that I love being negative. Honestly, there are times I'd rather be negative than to be overly positive. I always talk about mentioning the silly notions that my countrymen have like, "If the situation is bitter, just add sugar (read here )." In Cebuano, it's said, "Kung pait, butangi lang ug asu...
Read more

Can Anti-FDI Proponents Prove Their Claim That Economic Liberalization Will Just Benefit the Filipino Oligarchs?

The same old narration has been made over and over again . I'd dare say that the narration out the Facebook pages of the likes of Atty. Teddy Casiño, Atty. Neri Colmenares, Kabataan Partylist, League of Filipino Students, Migrante International, IBON Foundation, etc. are more or less the same. It's already a broken record based on the facts that they've been refuted. I've read the book From Third World to First . I guess Migrante International hates that book because Singapore is often associated with the execution of Flor Contemplacion, at least on their watch. What they're doing is nothing more than still hating Japan, Germany, and Italy because of the Second World War. I'm not surprised at another lie that's often repeated--economic liberalization (or 100% FDI shares ownership) will only  benefit the oligarchs . I guess it'll be easy to nail on me because I'm not a summa cum laude and Rep. Raoul Abellar Manuel is and he's a graduate of the Uni...
Read more

External Validations, like Masters and Doctorate, Mean NOTHING with a LOUSY Education System

I have the tendency to use my MBA as a license to avoid criticism. It's a real problem that some people use their credentials and/or academic achievements to try and win an argument. One incident I wrote about was Rep. Raoul Abellar Manuel flexing his "smarts" by using his cum laude degree to win the argument . It was all about how I would often say, "You're the moron because I have the MBA and you don't." There are times I felt like taking an MBA would make up for my "moral shortcomings" during high school when I was barely passing (and the passing rate was 80% , which is rather high), that I wasn't having honors, and that there was this saying, " Thou grades shalt determine thy future! " That, of course, has led to the reality where cheating is prevalent .  I wanted to make a review. I took my MBA in 2011 and graduated in 2014. I always felt that the MBA program was what I needed to become "invincible". It was also at ...
Read more