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natural disaster preparedness

The Toilet Paper Shortage: Can’t We Just Ship More?

As the COVID-19 coronavirus began to spread across our country, and people began to absorb the full impact that it would have on our workplaces and culture, Americans reacted by heading to grocery stores and buying “essentials” in bulk. It is possible consumers had become conditioned by other natural disasters like hurricanes, tornadoes, polar vortexes and the like to expect large-scale disruptions to the traditional grocery store supply chain.

Within a couple of weeks, the news media became flooded with pictures of empty shelves and lines of people waiting for consumer package goods (CPG).  The most curious case, and the one that has caught social media by storm, is the fact that consumers are ripping the toilet paper off the shelves quicker than manufactures can supply it. When there is a shortage that means some will go without. Those waiting for their paycheck? They’re out of luck. The elderly who can’t get to the store on time? Also, out of luck. In the UK, the overbuying has led to products being rationed and price hikes. In Hong Kong, it led to armed robbery.  However, when looking at it from a supply chain perspective, the problem has a simple explanation, one that is under-reported in the media.  The true demand for toilet paper hasn’t really changed (consumers aren’t all of a sudden using more toilet paper per capita) but their collective buying behavior has caused a change in demand upstream.

The industry runs on extreme efficiency and mills work at full capacity.

Since majority of people are working from home, restaurants are closed and any public place with a restroom are closed as well, there is less of a need of “industrial” toilet paper and an increased demand for “commercial” toilet paper. The toilet paper industry is unique in that this paper is a high-volume product but low value. It also has a low value by density. It’s large in size but weighs little and costs little. This means transportation costs are a significant portion of its total value.  The industry runs on extreme efficiency and mills work at full capacity. Manufacturing schedules are based on demand having little fluctuation, but this only works if demand is steady. When demand changes this causes supply problems. According to Will Oremus, with 75% of workers now working from home people are buying more commercial toilet paper than ever before, causing a huge spike in demand for this particular category of toilet paper.

Conversely, once this coronavirus crisis ends, demand for residential toilet paper will subside quickly back to traditional levels.  Therefore, the average family will then be overstocked, and their purchases will pause for a period of time until their inventory is depleted.  At this point in time, when the CPG company replenishments arrive in stores, there will be a surplus since consumers are overstocked. 

Because there were no shortages in the raw materials used to produce this product, and demand skyrocketed, we are seeing what is called the “bullwhip effect” (seen below).  We find ourselves stuck in a situation where panic demand causes the system to produce drastically more product for which there will not be enough buyers once the inventory finally arrives to catch up.

We simply can’t just replace the toilet paper

It’s important to note that we simply can’t just replace the toilet paper that belongs on the shelves with the unused toilet paper in airports, restaurants and other closed down businesses. These are essentially two different products that come from two completely different markets (commercial and industrial). The industrial paper comes from a completely different mill than the commercial paper requiring different supply chains. In fact, people are using 40% more commercial toilet paper than usual at home than they would be at any “normal” day. If we were to redirect the industrial supply to consumer supply there would be a need to establish new relationships and contracts with suppliers, design new packaging and shipping and route new trucking routes, all of which normally take years to accomplish and extremely costly.

The customer must be convinced that excessive purchasing of toilet paper is unnecessary.”  

We are at an uncertain time right now but it’s important that our actions reflect facts and not fears. The short supply of toilet of paper doesn’t necessarily come from panic and fear; it is simply a function of the differences between the B2C and B2B supply chains for this single product. There is a spike in demand and people are temporarily buying more for their homes, therefore supply is working to keep up with demand.  The CEO of ThroughPut explains that “when there is no more that can be done on the production side, the customer must be convinced that excessive purchasing of toilet paper is unnecessary.”  

What you can do to help “Weather-proof” Your Supply Chain?

Weather events can put a drastic slow down on your operations and unfortunately, it’s practically impossible to predict exactly when these events will happen. Sure, there are seasonal weather events like snow and hurricanes, which gives us a reasonable timeframe in which to expect these types of events. But even then, it still becomes a matter of “wait and see” as to whether or not the event will come to pass. And what about the events that we don’t expect such as nor’easters, polar vortex, or wildfires? There are certain catalysts that can create a potential for these events, such as an extended drought, but there’s no way of knowing for sure until the event is actually happening.  

In the event of something truly catastrophic, such as a hurricane, there’s even more pressure for the trucking industry to keep rolling on schedule.  

For most businesses, bad weather simply means staying home for the day and waiting for the weather to pass. Trucking companies, on the other hand, don’t have that luxury. Drivers are still expected to maintain their routes and delivery schedules, in spite of bad weather conditions. In the event of something truly catastrophic, such as a hurricane, there’s even more pressure for the trucking industry to keep rolling on schedule.  

Severe weather events can disrupt the supply chain causing lag and bottlenecks, especially during a true black swan event in which trucks are rerouted for emergency relief.  

For shippers and manufacturers, weather events can wreak havoc on delivery schedules, even when the weather event is thousands of miles away from you. Severe weather events can disrupt the supply chain causing lag and bottlenecks, especially during a true black swan event in which trucks are rerouted for emergency relief.  

So what can you do to prepare your supply chain against such events? 

A Reason for the Season 

Winter or summer, springtime floods or tropical storms in the fall, Mother Nature has predictably unpredictable conditions to throw at us. Plan in advance for alternate routes and parking locations if the regular road is closed and the usual truck parking is filled. Know in advance where road construction is planned. Always carry emergency gear appropriate to the season. Have a reliable response ready when faced with unreliable weather conditions. 

Part of preparing that reliable response is having good resources to turn to for accurate information. Every truck driver and every motor carrier dispatcher should have a list of phone numbers and websites for up-to-date reports on local weather, road closures, road construction and emergency notifications, such as during floods and storms. There are, of course, excellent commercial websites, products and services available. 

Here is a guide to begin building your own list of resources:

Always pull off the road and park in a safe location before checking websites or placing a phone call. Predictable responses and resources will help you meet the unpredictability of Mother Nature. 

Dealing with Sudden Spot Rate Hikes

One of the major aspects to keep in mind when you’re planning for weather events is how truckload rates can be affected by the weather. Since supply chains have become a global engine, a disruption in one location can cause problems in another. For shippers, that disruption can mean unexpectedly higher rates for shipping.

Here are a few best practices to dealing with a sudden surge in spot rates.  

  • Consider working with a third-party logistics (3PL) provider to augment your available capacity and carrier options: Outsourcing eliminates the burden of completing work in-house, but it still relies on efficiency in operation. 3PLs holistic approach, buying, and negotiating power can help augment your operations year-round.  
  • Explore intermodal and multimodal shipping options when the first chances of a storm’s arrival become apparent: Intermodal and multimodal shipping are usually used interchangeably, but both offer unique advantages to getting around after a major weather event.  
  • Increase the shipping budget through proactive, cost-saving measures through year-round operations: Cost-saving measures, such as improved dock management and load planning will naturally lead to savings in the budget. Such savings must not be 100% logged into the company profile. Instead, a percentage should be allocated for use in handling stretches in the freight budget after a disaster. More importantly, gains in efficiency will build resiliency and agility, allowing the supply chain to flex to meet the demands after a disaster.  

Batten Down the Hatches at HQ 

Spot rates are one way to deal with weather events abroad, but what happens when the storm is on your doorstep? Trucks being diverted can slow down your supply chain but when your base of operations is out of commission, everything comes to a grinding halt. Having a robust plan in place is necessary, especially if you operate in a location where inclement weather events is a yearly risk.  

Having the right infrastructure in place should be your first step.

Having the right infrastructure in place should be your first step. Does your main office have a contingency for backup power? How about internet access? Can your employees remotely access your company’s phone and operating systems? Something so simple as backup generators and remote desktops can keep operations moving despite external factors.  

Consider your personnel as well. Flexibility and cross-training of your staff mean that everyone on your roster is capable of handling a wider array of responsibilities. This is especially crucial during situations of crisis management when your A-team for customer service might be occupied with other necessary tasks.  

The better prepared it is, the more efficient it will be when it really counts.  

Having the right infrastructure in place is only the beginning, it’s important to have a plan in place for when the weather turns awry. More importantly, your team should know and understand the procedures for when such events take place. The better prepared it is, the more efficient it will be when it really counts.  To speak to one of our freight experts, contact us at 800.MY.SHIPPING or fill out the form below