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Marketing Viewpoint by Ruth Winett

Lessons from the Toilet Paper Panic

Suddenly in mid-March panicked consumers stripped shelves of toilet paper, paper towels, disinfectants, and sanitizer. In the nine weeks from March 12 through May 2, sales of toilet paper were 71% higher than the previous year, according to Nielsen data reported by Jen Wieczner ("The Case of the Missing Toilet Paper," Fortune, June/July 2020, p. 133).

Soon, anticipated shortages became actual shortages. What were some of the causes of the great 2020 toilet paper shortage, and what can we learn from this shortage?

Some of the causes of the shortages were:

  • Social changes. People were working and studying at home.
  • Consumer hoarding. Fearing stock outs, consumers inadvertently created them.
  • An imbalance in supply and demand. Once predictable, demand had suddenly increased by 40%.
  • Just-in-time ordering. Previously stores had not allocated valuable shelf space for extras of this bulky, low-priced item.
  • Just-in-time production. However, for manufacturers to add more toilet paper producing machines was prohibitive.
  • An inadequate supply chain, plus unreliable distribution centers.
  • The vagaries of international trade. Some toilet paper comes from fast-growing Brazilian eucalyptus trees.

Even though most businesses had closed, manufacturers could not allocate toilet paper produced for the institutional market for the home market. The two markets for toilet paper have different dynamics and different products: Many products for institutions come in larger rolls made of a different quality of paper.

While some retailers rationed what customers could buy, manufacturers responded to the shortages by limiting the quantity shipped to retailers and quickly developing strategies to increase production, including:

  • Shrinking the variety of products sold. Kimberly-Clark reduced costly downtime by halving the different types of toilet paper produced. This meant less time required to stop machines and load different materials. This also simplified packaging.
  • Updating supply chains. P&G added new suppliers and new distribution locations.
  • Introducing data analytics. P&G began using data analytics to predict swings in demand.
  • Redeploying staff. P&G has added shifts and spread out factory workers. Occasionally they have even deployed "desk workers" in the factories.

The Changes May Be Permanent

What can you learn from these challenging times and this modest product? First, collect data and assess the new reality. Then, develop new strategies for success. This may mean reducing the number and type of products or services you offer and then meeting customers’ needs in creative new ways. This includes identifying new suppliers and distributors. You also may have to re-assign staff. If you treat staff well, they will be willing to roll up their sleeves and take on new challenges in difficult times. All businesses must be flexible as conditions and demand can suddenly change, and the changes may be permanent.

Actionable Business Insights

Copyright © 8/20 Ruth Winett. All rights reserved.

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