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For basic goods like toilet paper, production hasn't fallen, and consumption hasn't risen. Distribution is still adequate for the amount of production and distr
by jeffdavis 7y ago
For basic goods like toilet paper, production hasn't fallen, and consumption hasn't risen. Distribution is still adequate for the amount of production and distribution, so it's not directly the problem, either.
The problem is buffering. Normally, buffering happens within the supply chain -- the back rooms of stores, loaded in trucks, warehouses, distribution centers, and the factories themselves. Now, we are telling everyone "buffer at home so you don't need to go out so much". But the problem is, buffering is much less efficient at the end of the chain, so you need to buffer a lot more. That's causing a short-term strain on production and distribution.
Blaming selfishness or gouging probably doesn't do much to help this problem. My guess is that the biggest problem is the discrepancy between how much stuff would be needed to buffer within the supply chain versus how much stuff is needed to buffer at the end of the supply chain (i.e. at home).
Worse, because it's a temporary buffering problem and there's no real increase in consumption, there's little incentive for production to increase now to alleviate it. Any increased production/distribution now just means less demand later when people start to work through their caches at home (and stop buying for a while).
So the only way to alleviate this is to allow the prices (that manufacturers charge) to rise, which will give manufacturers a cushion against the inevitable slump in the future. That's not very popular and not worth the brand damage, so it won't happen.
The good news is that I don't think this will last more than another few weeks. Gougers will stop buying at some point because they don't want to get stuck with a huge supply of toilet paper and no channels to sell it. And the home caches will fill up.
EDIT: this analysis has nothing to do with things like facemasks, where consumption has dramatically risen.