Yet millions of people have been panicking about their household supply. Stores shelves have been emptied. Amazon is often out of stock. And social media is bursting with jokes and pleas for a roll or two. Some were stockpiling last month in advance of government lockdown orders.
It’s a common reaction in times of a crisis, when consumers feel a need for control and security. Online and in-store U.S. toilet paper sales rose 51% between Feb. 24 and March 10, as buyers started getting uneasy about the growing number of virus cases. But sales rocketed a whopping 845% on March 11 and 12 as states announced lockdowns.
Toilet paper flows from paper mills to retail stores through a tight, efficient supply chain. It is bulky and not very profitable, so retailers don’t keep a lot of inventory on hand; they just get frequent shipments and restock their shelves. The amount of toilet paper the average American uses hasn’t changed; it’s around 141 rolls per year (compared to 134 rolls in Germany and just 49 rolls in China). But even small changes in buying habits can throw everything into disarray, as we see with the bullwhip effect discussed in Supplement 11 of your OM text.
With a regional disruption like a hurricane, stores can redirect some inventory to the affected area. But a global pandemic doesn’t leave a lot of wiggle room. The big three U.S. toilet paper companies — Georgia-Pacific, P&G, and Kimberly-Clark — were already running their toilet paper plants 24 hours a day before coronavirus hit. That’s the only way they can make a profit on such a low-margin product. But now the companies are trying to increase output by making fewer varieties of toilet paper.
Classroom discussion questions:
- Explain the bullwhip effect.
- What supply chain options are available?