Tuesday, March 31, 2020

Shortages, Supply Chains, and Coronavirus

The governors of Virginia and Maryland and the mayor of the District have issued a stay at home order, punishable by a fine and even jail time. The order goes to June 10 in Virginia. It allows us to to buy groceries, visit doctors, take a walk or get exercise, as long as we are in groups of less than ten. The point is to keep us out of crowds and out of harm's way while the pandemic rages on.

 Most people support the action. Everybody is scared now as the rate of infection and the death rate climb. The reality is settling in and the complaints about loss of freedom and government overstepping, are diminishing. There are still some diehards, but the news is sobering. Nothing focuses the mind quite so well as danger.

Besides the outright and justifiable fear of the Covid-19 virus, there's a secondary underlying palpable anxiety about the shortages of essential goods. Consumers confront stark empty shelves in sold out grocery stores. We are being confronted with shortages of everyday items we normally take for granted.

Frozen vegetables, canned goods, meats, fresh produce, milk, bread, toilet paper, disinfectants and hand sanitizer. Even flour for baking cakes and bread. At first, some of those shortages were funny and quickly became the object of jokes. After all, who in the DC Metro area hasn't experienced the panic buying of bread, milk, and toilet paper at the mere mention of a snow flurry? One long ago weather person even joked on air, "Call me whimsical but I always have toilet paper and milk at home."

Of course, in the first couple of weeks, I expected the panic buying and even hoarding. Since I'm one of those "whimsical" people who had more than a week's supplies because I shop regularly, I wasn't too worried about running low. I'd be fine for a couple of weeks - maybe three. By then, everybody will have bought what they need, the panic will subside, and how much toilet paper and Lysol wipes can a family of two or three in a suburban townhouse hoard, anyway? Where would they store it? We don't have large farmhouses or even McMansions in our neighborhood. Eventually, I figured, my neighbors would run out of room and realize the sky is not falling, just like they always do.

This time is different.

The shortages go on and on. Finding everything you need in one shopping trip is impossible. At a time when people are desperate to limit their exposure to a dangerous virus, shopping trips are taking longer and are sometimes more frequent simply because of the necessity of making multiple trips to multiple stores to find supplies. 

Business is brisk in online shopping too. People who would never before have considered delivery of their groceries are eagerly trying Peapod, Safeway, Instacart, Shipt, and other delivery services. The results have been mixed at best. 

Newspaper pundits in the Sunday sections have started predicting the ways the coronavirus would change how America lives. One of those predictions has been that the use of telework would increase as employers discover their workers are just as productive from home and expensive office space is not necessary. Another prediction was that as more and more Americans went online for their shopping, they would like its convenience, which would lead to even fewer brick and mortar stores. I don't think that's going to happen.

In what could have been their big opportunity to capture a grateful market, let's just say that for most delivery services, this has not been their shining hour. It's been impossible to get delivery service. Like all resources, it's severely strained. Every time I've tried to place any order with Giant's Peapod or Safeway's service, I can't even find a delivery date. People have told me the earliest date they can get is two weeks out, and sometimes a month away. Sometimes, you come up completely empty handed with no available dates and a message to try back later.

Besides not having delivery dates available, they don't have the most needed goods in stock. Stores like Walmart, CVS, and Target are limiting supplies to one package per customer and only selling scarce goods in their stores. You just have to be lucky to get there when what you need is available and hope for the best.  Dan and I have not seen any brand of wipes in a store for three weeks and they are either out of stock or not being sold online. For now, they seem impossible to get. 

This brings me to a question. Why the extreme shortages of things whose availability we used to take for granted? 

I can certainly understand a severe shortage of ventilators in hospitals. Ventilators are expensive and are not used commonly. They are essentially emergency equipment for relatively rare crisis situations, not frequently used medical devices. Given their expense, most hospitals only have a few available at any given time. Nobody planned for a pandemic on this scale. Nobody expected to run out of them. Nobody could.

But shortages of surgical masks and other disposable protective gear? The last time I was in an ER those were plentiful, given to any patient suspected of having a flu. You could buy a box of surgical masks in a supermarket or drugstore without even thinking about it. And now even hospitals can't get them for medical staff. That's insane.

For most routine stuff, I can indeed understand a temporary shortage in the early days of panic buying and hoarding, before retailers realized demand had shot up and before suppliers started ramping up. But with modern technology to track sales and inventory, they should already be figuring out the sharp increase in demand? And after three weeks of the public buying more than they could possibly use in more than a week or two, why is it still so hard for stores to be restocked?

What I am asking here is whether there is something wrong at a more basic level with our supply chain?

How much of the shortages are caused by how little of our consumer goods are manufactured in the U.S.? How much of the delay in getting more supplies is caused by the fact that they have to be imported and we are competing on an international market for goods produced far away from us at a time when an international supply chain has been disrupted by crisis?

I'm not a conspiracy theorist and I don't think there is a deliberate plan to block our access to consumer goods we need. Indeed, the entire rest of the world is experiencing the same panic buying, hoarding behavior, severe shortages and supply chain disruptions as we are. I know this.

But I am wondering whether we are paying a steep price now for having outsourced and off shored so much of our manufacturing capacity? We are basically competing with other countries in crisis for the same still limited supplies on an international market with less control over ramping up production. If more of our consumer goods were made at home, we could solve a couple of problems caused by the pandemic. First, many of the out of work employees from the hospitality and retail industries currently closed down would be able to find jobs in manufacturing as those companies expanded to meet the rising, albeit temporary, demand. And with more goods flowing into our stores, the panic could ease. As it is now, every day of shortages simply produces more panic buying and more hoarding. I don't know when we will find our way out of that vicious cycle. But I'm pretty sure now that it won't be any time soon.

It seems fear of the virus itself and accompanying anxiety about shortages and deprivation are our new normal at least for several more months. 






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