The supply disruptions affecting some seemingly basic products have been fairly sustained. While it is now easier than it was at the start of the lockdown to fine, say, toilet paper and tissues. Other items continue to be hard to come by. Articles are regularly appearing offering one explanation or another for why [fill in the blank] still isn’t on the shelf.
Take, for example, disinfectant wipes. These are basically on every list of how to be safe during the pandemic. That led to a burst of buying in February and March and the likes of Clorox and Lysol are still trying to catch up. One consideration here is that in contrast to items like toilet paper wipes were not in every pantry before the crisis hit and they also aren’t that easy to make (Why Clorox Wipes Are Still So Hard to Find, Wall Street Journal, May 7).
Disinfectant wipes can’t be made as readily as hand sanitizer. The process combines fabric wipes with the cleaning solution, and the Environmental Protection Agency has in place criteria for cleaners to be considered effective for use against SARS-CoV-2, the virus that causes Covid-19.
And unlike toilet paper, which is ubiquitous in homes and businesses, only about half of American households stocked disinfectant wipes before the pandemic, Clorox’s Mr. Jacobsen said. That led to an even more dramatic demand spike as current wipe users consumed a much higher volume while new buyers sought them out.
What have manufacturer’s done? For one, they have limited variety (you will see that this is a recurring refrain). Clorox, for example, made some compostable wipes that didn’t meet the EPA’s disinfectant standards. You won’t be seeing those in stores any time soon. Reducing variety has a couple of benefits. First, it will eliminate changeovers. That is, because they are not switching between products as frequently, they will have to stop the process less often to change scents, labels etc. A second benefit is that it should simplify forecasting. Under normal circumstances, a manufacturer would have to take an educated guess at how much demand there is for each product variant. That risks having too much of one SKU and not enough of another. That risk may be worth taking if an additional scent or package size brings in added sales. Now, however, they can get those sales without the added complexity.
An interesting twist for Clorox is that they are wagering that this is not just a flash in the pan and that higher demand will last beyond the current crisis. They are making capital investments to expand capacity. That does not sound like a totally crazy bet.
Another item that has gone missing is flour. There has been a burst of bread making at my house but I have not been able to buy a bag of bread flour for weeks. The hold up here appears to be, of all things, packaging (Americans Have Baked All the Flour Away, The Atlantic, May 12).
This sudden demand has thrown a wrench into the flour distribution process. In America’s industrialized-food supply chain, getting ingredients to the people who want them depends on far more than availability of the food itself. Supplies of wheat have actually remained abundant for flour brands, because less is being sent to restaurants and industrial bakeries. But brands are competing with one another to source the paper bags that consumer flour is packed in, as well as the trucks and drivers necessary to move it around the country. Bags of flour are big and bulky, and are allotted relatively little space on store shelves. And there’s the matter of making the flour—factories can ramp up their production only so much and still keep employees safe.
Part of the response for flour brands has been a logistical shift. From the Valley News, the hometown paper of King Arthur flour (The Great American Baking Boom shakes the Upper Valley, May 1):
King Arthur has managed its increase in sales while retooling. The company added shifts and changed its workstations to accommodate social distancing requirements. It moved some shipments from rail to truck freight, which is more flexible. And it expanded the capacity of its recently redeveloped website to handle more orders.
This basically seems to be trading off cost for speed. Rail is going to be a cheaper option but would also mean bigger shipments and longer flow times. Shipping out by truck is going to be more expensive for each pound of flour but would mean being able to more easily split production between multiple geographic markets.
Finally, pasta. This has some similarities with flour since it too starts with wheat and has also seen a drop in sales to institutional customers. But it too is missing from supermarket shelves as demand is up 30% or so (The Shape of the Pasta Industry, Slate, May 14). One complication in meeting that surge in demand is that at least some parts of the supply chain produce to order:
Many farms and mills already had reserves of durum that they could draw on during the initial weeks of the coronavirus crisis, according to James Meyer, CEO of the flour producer Italgrani. Yet the St. Louis company, which is the largest semolina and durum miller in North America, still had to kick up production. Italgrani produces flour to order, so at the beginning of each week it determines how many days the mill should run to fulfill orders from pasta factories. In normal times, the mill runs 24 hours a day, five days a week. Italgrani bumped up to 24/7 in April.
Logistics have also been an issue. Italgrani has had to lease additional railcars. Pasta makers, like flour brands, have had a hard time getting the right packaging and that has led them to, you guessed it, to reduce variety. But the biggest issue has been getting enough workers:
According to Schalles, the biggest bottleneck the company has been facing is hiring enough workers and getting them onto the production floor. The pasta-making industry usually has high turnover rates, which Schalles attributes to the uncomfortably hot working conditions caused by the machines that dry the product, and its need for more workers has only grown during the pandemic. … The procedures that the Philadelphia Macaroni Company has put in place to screen people for the virus, which includes daily temperature checks and health surveys, also create a chokepoint in terms of getting employees to their workstations. Zuanelli notes that ramping up production in this respect has been slightly easier for companies like his that have become increasingly reliant on automation for tasks like flour mixing and packaging. The machines just have to run for a longer amount of time and undergo modifications to increase the yield.
So what are the common threads in these examples? All of these industries have seen spikes in demand and those spikes are likely transient. While it is plausible that higher demand for disinfectant wipes may have some legs, baking as a hobby and eating in every night may fade more quickly once things return to some semblance of normality. That puts a premium on short, nearterm ways of expanding capacity — overtime and cutting less popular products are the low hanging fruit.
They also show how seemingly trivial parts of the process (packaging?!) can become unexpected constraints — although it may not be too surprising. How do you win the contract to sell packaging materials to Pillsbury or Barilla? My guess would be that once you get past demonstrating that you can produce to meet the specification and hit the delivery schedule, it’s all about the price. Basic food packaging is a commodity business and that does not lend itself to carrying extra inventory or carrying a spare production line.
"blank" - Google News
May 15, 2020 at 04:54PM
https://ift.tt/2LBsn5H
Where is the [fill in the blank]? - stopthefud
"blank" - Google News
https://ift.tt/3aXU3fw
https://ift.tt/2Wij67R
Bagikan Berita Ini
0 Response to "Where is the [fill in the blank]? - stopthefud"
Post a Comment