What Toilet Paper Can Teach Us About Supply Chains
Toilet paper, a seemingly mundane household product, became an unexpected symbol and teacher during times of crisis, particularly in the early stages of the COVID-19 pandemic. The shortage of toilet paper in stores sparked widespread discussions about supply chains, consumer behavior, and the interconnectedness of global trade.
Public Facts about Toilet Paper Shortage
- During the COVID-19 pandemic, toilet paper shortages were reported in March 2020 in multiple countries due to hoarding and panic buying. At first, few believed the pandemic would be serious. Later, people realised they might need to stock up on certain items in case of a shelter-in-place order, or in case they did not know how long such an order would last; suppliers could not assure that they could keep up with demand.
- However, manufacturers continued to produce even more than they had before. Demand was higher for the types of toilet paper used at home because so many people were at home who would have used toilet paper away from home. In countries other than the United States, the bidet was already seen as a solution, and a survey before the pandemic had indicated an increasing number of Americans would be interested.
TEDX Talk by Harvard Professor on Toilet Paper Supply Chain
This everyday item can indeed impart valuable lessons about supply chains:
- Visibility and Transparency: The toilet paper shortage emphasized the importance of visibility and transparency in supply chains. Consumers, accustomed to finding shelves stocked with toilet paper, were suddenly faced with empty aisles. This scarcity underscored the need for better visibility into the entire supply chain, from raw material sourcing to manufacturing, distribution, and retail.
- Demand Forecasting Challenges: The surge in demand for toilet paper at the onset of the pandemic revealed the challenges associated with accurate demand forecasting. Supply chain planners and retailers struggled to predict the unprecedented spike in consumer demand, leading to shortages. This event highlighted the importance of advanced analytics and real-time data in refining demand forecasting models.
- Global Interdependencies: The toilet paper shortage shed light on the global interdependencies within supply chains. Toilet paper production often relies on a network of suppliers, manufacturers, and distributors spanning multiple countries. Disruptions in one part of the world can have a cascading effect on the entire supply chain, emphasizing the need for diversified sourcing strategies.
- Supply Chain Resilience: The toilet paper crisis underscored the importance of building resilient supply chains. Supply chains that proved to be more adaptable and resilient could pivot to address disruptions more effectively. This prompted organizations to reassess their supply chain strategies, considering factors like dual sourcing, inventory buffers, and risk mitigation plans.
- Consumer Behavior Impact: The toilet paper shortage provided insights into the impact of consumer behavior on supply chains. Panic buying and hoarding significantly exacerbated the scarcity. Understanding and influencing consumer behavior, therefore, became an essential aspect of managing supply chain dynamics during times of crisis.
- Inventory Management and Lean Principles: The toilet paper shortage prompted discussions about inventory management practices. Many businesses, adhering to lean principles to minimize costs, maintained low inventory levels. However, this crisis highlighted the delicate balance between cost efficiency and the need for safety stock to respond to unforeseen demand spikes.
- Communication and Collaboration: The toilet paper scarcity revealed the importance of communication and collaboration within the supply chain ecosystem. Effective communication between suppliers, manufacturers, distributors, and retailers is crucial for responding swiftly to disruptions, sharing information, and collectively managing challenges.
- Adaptive Supply Chain Strategies: The toilet paper crisis demonstrated the necessity for supply chains to adopt adaptive strategies. Organizations that could quickly adjust production, distribution, and sourcing strategies were better equipped to navigate the evolving landscape of consumer demand and supply chain disruptions.
In conclusion, the toilet paper shortage serves as an unexpected yet insightful teacher, offering valuable lessons about the intricacies of supply chains. It highlights the need for resilience, adaptability, and transparency, encouraging businesses to rethink their supply chain strategies in an ever-changing and interconnected world. The toilet paper aisle became a classroom, teaching us that even the most ordinary products can unravel profound insights into the complexities of modern supply chains.
How Toilet Paper Companied Dealt with the 845% Demand Spike?
Based on the Business Insider Report
A run on toilet paper left shelves empty across the US. But why did this happen? Turns out, it wasn’t just hoarders’ fault. Sure, panic buying was part of it. But coupled with a division between commercial and consumer manufacturing of toilet paper, rolls were cleared from retail stores. We spoke with a consumer behaviour expert to unpack what caused the panic buying. Then we learned how two toilet-paper manufacturers kept up with demand.
The unprecedented demand spike for toilet paper during the early stages of the COVID-19 pandemic, which saw an 845% surge in sales, presented a significant challenge for toilet paper companies. The surge in demand was driven by consumer panic-buying and stockpiling as concerns about the pandemic led to widespread uncertainty. To cope with this extraordinary situation, toilet paper companies implemented various strategies to address the surge in demand, maintain production, and optimize supply chain operations. Here are some of the ways these companies dealt with the immense increase in demand:
- Increased Production Output: Toilet paper manufacturers responded to the surge in demand by ramping up production. Many companies operated their manufacturing facilities around the clock, maximizing production output to meet the sudden spike in consumer needs. This involved optimizing production schedules, increasing staffing levels, and sometimes even investing in additional production lines or equipment.
- Operational Efficiency and Automation: To enhance operational efficiency and meet the increased demand, some toilet paper companies leveraged automation and advanced technologies within their production processes. Automation helped streamline manufacturing operations, reduce human labor requirements, and improve overall production efficiency.
- Prioritizing Core Products: In response to the high demand for specific products, toilet paper companies prioritized the production of core and essential items. This often meant focusing on producing standard toilet paper products rather than a wide range of variations or specialized items. Streamlining product offerings allowed companies to allocate resources more efficiently.
- Supply Chain Visibility and Collaboration: Toilet paper manufacturers sought to enhance visibility across their supply chains to better understand and respond to disruptions. Collaborating closely with suppliers, distributors, and retailers became crucial for sharing information, addressing bottlenecks, and ensuring a smoother flow of products from production to the end consumer.
- Adoption of Advanced Analytics: Some companies employed advanced analytics and data-driven insights to improve demand forecasting. By analyzing consumer behavior, purchasing patterns, and market trends, toilet paper manufacturers aimed to refine their demand forecasts and adapt production plans accordingly. This data-driven approach helped in better anticipating and responding to market dynamics.
- Diversification of Distribution Channels: Toilet paper companies explored diversifying their distribution channels to ensure wider availability of their products. This included strengthening relationships with traditional retailers, exploring e-commerce channels, and collaborating with online platforms to reach consumers who were increasingly turning to online shopping during lockdowns.
- Communication with Consumers: Transparent and effective communication with consumers played a crucial role in managing the surge in demand. Some toilet paper companies communicated openly about their efforts to meet increased demand, assured consumers of their commitment to continuous production, and provided updates on product availability to manage expectations.
- Supply Chain Resilience Planning: The experience of the demand spike prompted many toilet paper companies to reassess and strengthen their supply chain resilience. This involved revisiting supply chain strategies, evaluating potential risks, and implementing measures to enhance resilience against future disruptions.
- Collaboration with Regulatory Authorities: In some regions, toilet paper companies collaborated with regulatory authorities to ensure that the supply chain remained operational and that essential workers in the manufacturing and distribution processes could operate safely during lockdowns or other restrictions.
In summary, toilet paper companies navigated the 845% demand spike by implementing a combination of increased production, operational efficiency improvements, enhanced supply chain visibility, collaboration, and effective communication strategies. The experience served as a lesson in agility and adaptability, prompting companies to reevaluate and reinforce their supply chain strategies to better respond to unforeseen challenges.
What Toilet Paper Shortages tell us about Supply Chains ? FT Trade Report
The toilet paper shortages served as a case study that revealed several important insights into the dynamics and vulnerabilities of modern supply chains:
- Consumer Behavior and Panic Buying: The toilet paper shortages underscored the profound impact of consumer behavior on supply chains. Panic buying and stockpiling, driven by fear and uncertainty during the early stages of the pandemic, led to an unprecedented surge in demand. This highlighted the need for supply chains to be adaptable to sudden shifts in consumer behavior.
- Demand Forecasting Challenges: The crisis revealed the limitations of traditional demand forecasting models. The surge in demand for toilet paper caught many retailers and manufacturers off guard, emphasizing the challenges associated with accurately predicting and preparing for unexpected spikes in consumer demand.
- Global Interdependencies and Supply Chain Disruptions: The toilet paper shortages highlighted the global interdependencies within supply chains. Toilet paper production relies on a complex network of suppliers, manufacturers, and distributors spanning multiple countries. Disruptions in one part of the world, such as factory closures or transportation challenges, had cascading effects on the entire supply chain.
- Lean Supply Chain Practices and Inventory Management: The shortages prompted discussions about the implications of lean supply chain practices. Many businesses, aiming for cost efficiency, had adopted lean principles that involved maintaining low inventory levels. The crisis revealed the delicate balance between cost efficiency and the need for safety stock to respond to unforeseen demand spikes.
- Communication and Collaboration Challenges: The crisis highlighted the importance of effective communication and collaboration within the supply chain ecosystem. Coordinating efforts between suppliers, manufacturers, distributors, and retailers became crucial for sharing information, addressing bottlenecks, and collectively managing challenges. In some cases, communication breakdowns exacerbated supply chain disruptions.
- Resilience and Adaptability: The toilet paper shortages underscored the necessity for supply chains to build resilience and adaptability. Organizations that could quickly adjust production, distribution, and sourcing strategies were better equipped to navigate the evolving landscape of consumer demand and supply chain disruptions.
- E-commerce and Distribution Channel Shifts: The crisis accelerated the shift towards e-commerce as consumers sought alternative ways to access essential products. Toilet paper companies and retailers had to adapt to the changing distribution landscape, emphasizing the need for flexibility in responding to shifts in consumer preferences and behavior.
- Government and Regulatory Influences: Government responses and regulations played a role in shaping the supply chain landscape during the crisis. Toilet paper manufacturers collaborated with regulatory authorities to ensure the continued operation of essential supply chain functions and to address challenges related to workforce safety and transportation.
- Lessons for Future Preparedness: The toilet paper shortages serve as a valuable lesson for businesses to reassess their supply chain strategies for future preparedness. This includes reevaluating inventory management practices, enhancing communication and collaboration, diversifying sourcing strategies, and building resilience against potential disruptions.
In conclusion, the toilet paper shortages during the pandemic served as a real-world scenario that shed light on the complexities and vulnerabilities of modern supply chains. The lessons learned from this experience will likely influence future supply chain strategies, encouraging businesses to adopt more flexible, resilient, and adaptive approaches to navigate uncertainties.
