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Saturday, April 17, 2021

Supply chain pain: COVID-19 sends consumers into hoard mode

Like thousands of local residents and millions of people across America, Terri Schrobilgen of Southlake headed to Costco recently to stock up on food and paper goods.

Schrobilgen was pleasantly surprised to find that her local Costco apparently took pity on the line of shoppers that had been assembling for about two hours in the rain and decided to open 30 minutes early.

Like everyone else who arrived early, Schrobilgen was able to nab a large a large pack of paper towels and other essential items on her shopping list but was disappointed that there was no toilet paper to be had.

“I never imagined I would stand in line to buy toilet paper,” Schrobilgen said as she loaded her haul into the back end of her SUV.

“I’m not afraid of the coronavirus,” she said. “I’m a cancer survivor so I’ve experienced worse.

“I’m afraid of what this is doing to the supply chain,” she said. “What’s going to happen when stores will run out of toothpaste, toilet paper and food?”

With uncertainty about how long the threat of coronavirus will last, shoppers like Schrobilgen aren’t taking any chances.

“It’s sends a powerful message to consumers who walk into a grocery store and see empty shelves,” said Jeff Stratman, department chair and professor of Information Systems and Supply Chain Management at the Neeley School of Business at Texas Christian University. “It creates an irrational fear that I’ve got to get this for my family or it will be gone.

“People start hoarding,” Stratman said. “Not just toilet paper but other things like hand sanitizer and non-perishable food.

“It’s basic human behavior of trying to control something when you are facing something you can’t control like COVID-19,” he said.

The result has been pressure on the supply chain, which experts predict will rebound as consumers realize they have enough toilet paper and paper towels to last a year.

But even after the initial rush to stockpile, shoppers continued to be spooked by announcements of more cases and deaths in the Dallas-Fort Worth area from coronavirus and restrictions on restaurants and bars to curbside pickup and drive thru service also encourage people to prepare food and eat at home.

Panicked consumers worried about exposure continued their run on grocery stores in search of perishable items such as poultry, ground beef, cheese and vegetables, which stores were struggling to keep in stock.

“It’s a classic situation – a demand-supply mismatch,” said Morgan Swink, West Chair and professor of Supply Chain Management at the Neeley Business School of Management and the Executive Director of the Supply and Value Chain Center at TCU.

Swink said the supply chain in unable to respond as it might have in 10 years ago because grocery stores and big-box retailers such as Walmart and Target have become more efficient and no longer stockpile large inventories. The move – part of just-in-time supply systems – has improved efficiency and eliminated waste, which has improved profits for an industry that historically operated on thin margins.

“What we’re seeing is an anomaly that moves up and down the supply chain,” Swink said. “When people stop over-reacting, the demand can be satisfied. Right now, there’s a lot of supply moving through the system.”

Besides retailers, the supply chain for the food industry includes manufacturers, warehouses and distributors.

“I would imagine that the last mile delivery services such as Uber Eats and Amazon are extremely stressed right now,” Swink said.

Exacerbating the problem is a worker shortage as a result of social distancing rules that have shuttered schools and kept parents at home with their children as well as limited the number of people who can be in the same place at one time.

But retail industry giant Amazon as well as local grocery store chains have responded with innovative solutions that include hiring more workers, limiting the most sought-after products, reducing operating hours and dedicating times for senior citizens, the most vulnerable population for the disease, to shop for food and necessities without the crowds.

Amazon announced on March 16 that would hire 100,000 warehouse and delivery workers to help meet demand, including 5,900 in Texas, with 3,300 of the jobs landing in the Dallas-Fort Worth area. Amazon has more than 20,000 full-time jobs in Texas a company spokeswoman said. 

The jobs will include full- and part-time positions.

“We know that many people have been economically impacted as jobs in areas like hospitality, restaurants and travel are lost or furloughed as part of this crisis, “ the company said in a statement. “We want those people to know we welcome them on our teams until things return to normal and their past employer is able to bring them back.”

Amazon also said it will increase the $15 per hour rate for hourly workers by $2 per hour worked through April in the U.S. Europe and Canada, an investment of more than $350 million.

Tom Thumb and Albertsons, both part of the same national grocery store chain, are seeking to hire about 3,000 workers.

The H-E-B grocery chain, the parent company of Central Market, has placed limits on nearly 40 food and paper items that have endangered supplies, including chicken, group beef, bottled water, baby formula, frozen pizza, past, canned soup, diapers, baby wipes, hand sanitizer and hand soap.

Government and grocery store industry leaders are encouraging consumers to be considerate and avoid hoarding.

“If you don’t need an item in the next two weeks, leave it for someone who does,” said a joint statement from the Retail Industry Leaders Association and the National Retail Federation, both trade groups. “Hoarding and stockpiling creates unnecessary gaps between the time that someone else who truly needs a product can find it back on retailers’ shelves.

“This is particularly important for our most vulnerable neighbors – the elderly and those who are struggling with other health issues.”

Overcoming the temptation to buy more than necessary is a challenge.

As she was loading her haul at Costco in Southlake, Carmen Clark of Roanoke said she was worried because she was nearly out of food and panicked.

The Costco stop came after a dash the evening beforehand to the Walmart in Decatur.

“A friend who lives in Rhome said the Walmart was well stocked so I got in my car and went,” she said. “This taught me a lesson about keeping stuff on-hand just in case.”

As for Schrobilgen, she said she was trying not to overbuy but she needed more than usual because her college-aged son is back home, possibly until the end of the semester.

“We paid for a meal plan that we are not able to use,” she said. “So now I’m feeding my son and his friends who are also around so I need more food.”

Toilet Paper Fun Facts

– About 70%-75 % of the world’s population does not use toilet paper.

– Toilet paper has secondary uses such as nose care, removing makeup, covering toilet seats, packaging material, cleaning mirrors, cleaning glasses, etc.

– In an average household, the average roll of toilet paper lasts approximately five days.

– Consumers use approximately eight or nine sheets of paper per toilet use.

– Seven percent of Americans steal rolls of toilet paper in hotels or motels.

– It takes about 384 trees to make the toilet paper that one person uses in a lifetime.

– The average person uses 100 rolls of toilet paper per year (more than 20,000 sheets).

Source: Toilet Paper History


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