KALAMAZOO, Mich.—Spending time at home versus school or the office during the COVID-19 pandemic means Americans are significantly increasing their use of everyday household items. But why, with a drive in demand, are grocery store shelves still consistently wiped out of products like toilet paper? Western Michigan University supply chain expert Tom Kelly explains how changes to consumer behavior and the disruption to global supply chains amidst the novel coronavirus pandemic play a role.
Kelly, an instructor in the Haworth College of Business integrated supply management program, identifies key reasons stores are struggling to keep widely used items in stock.
“There are a number of factors impacting the level of inventory we see in stores,” he says. “The main concern is exposure to the virus. Reducing exposure has changed the way we purchase products and how much we buy. Many people are limiting their public activities like shopping to every other week, which means they will buy two weeks’ supply of product at a time. This in turn makes shelves look less full, and people start to get concerned about the availability of a product and buy more, just in case."
STOCKING UP ON STAPLES
Kelly adds that limiting exposure to the virus has also changed what consumers purchase.
“Prior to the pandemic, we all had certain products at home to keep us safe and healthy,” he says. “With new recommended protocols from the Center for Disease Control, we are now consuming more of these products faster, which results in spikes in demand.”
Nielsen data revealed hand sanitizer sales were up over 470%, and aerosol disinfectant product sales shot up 385% the week ending March 7. The following weeks saw spikes in household paper products, with Nielsen reporting that bath tissue, facial tissue and paper towels all saw triple-digit sales increases during the week that ended March 14.
“To increase production to these levels, companies have to add significant resources and capacity—everything from people to equipment,” Kelly says. “Sourcing these resources takes time.”
Adding to the lack of availability in stores is the fact that, before the pandemic, many of the products consumers use daily were provided by other organizations.
“Prior to this event, most people would spend 8 to 10 hours outside the home,” Kelly says. “When we are out of the house, other organizations supply many of the products we need. When we are at work, how often do we drink the company coffee?” This in turn affects buying habits, he says.
“We now have to change our purchasing habits to include items others might supply. By themselves, these changes might not create shortages. We are still drinking the same amount of coffee as we did at work. However, what has changed is the distribution network that gets the coffee to the consumer. Businesses usually buy their products through wholesalers, but we buy our coffee through retailers. To meet the need, the coffee has to be rerouted and maybe even repackaged to the retailer so that we can access it.”
Getting product from the factory, to the warehouse, to the store, to the consumer—all while limiting exposure to the virus—poses challenges to logistics activity, Kelly explains.
“We are seeing major adaptations to this process. For example, we continue to see double-digit growth in online purchases and increased use of specialty delivery services for restaurants to reduce possible contact. These are all short-term solutions to increase product availability.”
DELIVERING ON DEMAND
Kelly says any of the factors mentioned could create some disruption in the availability of products. But together, they are driving the shortages consumers are seeing in day-to-day retail experiences.
“The important takeaway is that supply chains will need to work with all functions within an organization—sales, operations, customer service— to determine what will be ‘normal’ going forward and what they will need to deliver in order to meet demand,” he says. “I can’t emphasize enough how important it is for supply chain professionals to use this event as an opportunity to improve their processes. Supply chain is about delivering value to the company and the customer. We must meet customer expectations and at the same time reduce risk. Continuing to reflect on and improve processes will drive that success.”
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