It's definitely not an idiotic approach, and companies do keep buffers. In the most advanced cases, probabilistic models are devised to estimate how big these buffers should be. Asking for companies to keep buffers for unpredictable "once in a century"-type events is unrealistic.
Yeah that's the problem, those estimates are usually arounds zero it seems. I mean sure on paper it checks out to be most profitable and most of the time it also works in real life. But you end up with this rube goldberg supply chain machine that can't be stopped or you apparently end up with a cyclic dependency problem and you cannot restart your production.
We build structures to take a one in a ten thousand year flood or earthquake, but it's too much to expect corporations to keep more than 2 weeks of stock? Sure.
Efficiency argues for keeping those buffers as small as possible. In a series of "normal years", a business that keeps their inventory down to what they need in the "normal case" will be more efficient than one which keeps a larger inventory to handle more rare events. As a result, the former will out-compete the latter in the market. (Inventory, in this example, is just one "buffered" resource that needs to be managed correctly under differing circumstances.)
Efficiency, past a point, is therefore the enemy of resiliency.
Until that day that something bad happens.
And then you have an issue where one business may be prepared for the bad event, but something downstream of it is not; they can produce all the widgets, but can't ship them anywhere for example.
> Panic buying of paper towels early on in the pandemic, as an example, was not predictable.
What? It was entirely predictable, except maybe for those high-end executives who live in hotels and/or with full-time house service, and are thus completely detached from life of ordinary people.
The panic buying was limited to the most obvious category of goods: basic consumables with some degree of shelf life, prioritized by survival and then comfort. This means food (particularly canned, shelf-stable, or freezable - plus baby food and pet food - and ingredients, including flour, yeast and baking soda), hygiene (soap, toilet paper!, and - perhaps specific to pandemic - hand sanitizers and masks), fuel, household cleaning (including cleaning agents and, surprise surprise, paper towels), comfort consumables (coffee).
It's not hindsight on my part - think of how people individually decided what to buy. They didn't buy whatever they see everyone else buying. They just asked themselves: what do I eat? How do I keep myself and the household clean? What else do I buy on a regular basis? What do I need to maintain a semblance of my current lifestyle? The answers, prioritized, were what everyone then went to stock up on.
