I have mentioned before my puzzlement as to the run on toilet paper, where people seemed to be buying much more than they needed so that the stores ran out of them. It was put down to irrational hoarding and there were plenty of jokes made about this phenomenon. I even came across Freudian explanations, saying that the control of one’s bowels is a major achievement for little children that they are proud of, and loss of toilet paper was associated with loss of that control in people’s subconscious, which was why they did not want to risk any chance at all of running out.
Will Oremus writes that the reasons are much simpler and is due to the way the supply chains of products work.
Story after story explains the toilet paper outages as a sort of fluke of consumer irrationality. Unlike hand sanitizer, N95 masks, or hospital ventilators, they note, toilet paper serves no special function in a pandemic. Toilet paper manufacturers are cranking out the same supply as always. And it’s not like people are using the bathroom more often, right?
No doubt there’s been some panic-buying, particularly once photos of empty store shelves began circulating on social media. There have also been a handful of documented cases of true hoarding. But you don’t need to assume that most consumers are greedy or irrational to understand how coronavirus would spur a surge in demand. And you can stop wondering where in the world people are storing all that Quilted Northern.
There’s another, entirely logical explanation for why stores have run out of toilet paper — one that has gone oddly overlooked in the vast majority of media coverage. It has nothing to do with psychology and everything to do with supply chains. It helps to explain why stores are still having trouble keeping it in stock, weeks after they started limiting how many a customer could purchase.
He says that supply chains for many items (like toilet paper) are tightly linked to the retail market and whether they are targeted at commercial establishments (like offices, restaurants, and other public places) or the home market, and the two products are quite different.
In short, the toilet paper industry is split into two, largely separate markets: commercial and consumer. The pandemic has shifted the lion’s share of demand to the latter. People actually do need to buy significantly more toilet paper during the pandemic — not because they’re making more trips to the bathroom, but because they’re making more of them at home. With some 75% of the U.S. population under stay-at-home orders, Americans are no longer using the restrooms at their workplace, in schools, at restaurants, at hotels, or in airports.
He says that the profit margins for toilet paper are very small and that the product is low cost but bulky, making it financially not worth having huge stockpiles of the stuff in warehouses. So the production side is usually working at full tilt and supply is tightly matched to the demand. But that delicate balance got upended when suddenly home demand went up by 40% with a corresponding decrease in commercial need. Shifting the supply chain from commercial to domestic is not easy, because the two products are different. Sending commercial toilet paper to supermarkets would require new contracts to be negotiated and signed, and it is not clear if people would buy that product for their homes.
Because toilet paper is high volume but low value, the industry runs on extreme efficiency, with mills built to work at full capacity around the clock even in normal times. That works only because demand is typically so steady. If toilet paper manufacturers spend a bunch of money now to refocus on the retail channel, they’ll face the same problem in reverse once people head back to work again.
I had thought that after the initial burst of buying, things would get back to normal. But given this analysis, that is not likely to happen until people get back to something like their previous routines of being out of their homes.
They have to shift production from the commercial to the home market because as anyone in a TP using country can tell you, the difference in quality is stark. I don’t know anyone who uses single ply sandpaper TP in the home. Only cost cutting public and commercial buildings do that.
That video was hilarious! And the explanation of the increased home use of TP makes perfect sense.
I’ve said this over on Marcus Ranum’s blog, but I’ve been hearing this explanation a lot recently, and I don’t think it’s entirely accurate.
At least where I am (San Francisco Bay Area), the toilet paper aisles in the supermarkets in my area emptied out a good week or two before the general lock-down kicked in. Also, I haven’t been out to check, but I’ve been hearing reports that it’s now available in most supermarkets. Neither of these really fits with placing the blame entirely on more people sitting at home than usual.
While I’m sure that’s part of the problem, I do think there was some extent of panic-hoarding by some people, which likely triggered other people to buy when they did not need to, as they saw the depleted aisles, and feared an upcoming shortage.
We’ve clearly had panic-buying/hoarding on other items, like hand sanitizer, so while I do think toilet paper is an odd choice, I don’t think it’s unreasonable to believe that people have been hoarding it.
You don’t even need a 40% rise to get problems here.
https://en.wikipedia.org/wiki/Queueing_theory
For your supermarket shelf to have a reasonable state (not completely full and backing up the supply chain, not empty with nothing to buy, but somewhere in-between) the rate of arrival has to match the rate of departure from the shelf. How closely? Pretty much exactly. The slightest deviation will very quickly send the shelf to one of its two saturation states.
Now, filling the shelf can be dealt with dialing back the supply chain to an extent, at least in the short term -- if it became a long term reality then that’s wasting money on unused capacity, so supply chain capacity would be cut. Permanently.
Emptying the shelf can only be resolved by sitting out short-term demand spikes and hoping they go away (smoothing it out into the next short-term demand dip), or increasing supply capacity for long term changes. But, we can’t do *that* quickly.
But the thing that many don’t appreciate is just how sensitive this is: the *slightest* different between arrival and departure rate will drive the queue to saturation *very* rapidly, it won’t be a gradual thing you can notice and deal with before things break.
(Unless you already had in place significant overprovisioning and control feedback loops, enough to deal with any conceivable change in demand, but that apparently ain’t how modern economics rolls.)
So the solution should be for employees to be given toilet paper (or be allowed to purchase) from their employers because the commercial toilet paper market must be tanking.
While I wouldn’t like to have one of those jumbo rolls used by my workplace, I certainly would prefer that to running out entirely.
That was down to people panic buying ahead of the business and travel changes, both predicting and contributing to the bare shelves by frontloading the demand.
What Lochaber wrote. Here in Oz, the shelves emptied well before any restrictions were imposed. That is to say, before people were staying home.
(And since, the obvious has happened; everyone who hoarded is full of hoardings already, and paper is now back on the shelves)
I went to our local supermarket on Saturday morning and saw packets of toilet paper on the shelves for the first time in a few weeks. Shoppers were wandering around with a large packet in their trolley and a look of abject relief on their faces. At the rate people were buying that small stock would have lasted a little more than another half hour. I heroically resisted the temptation to buy on as we still have enough for a few weeks. Rationally I expect there will be paper available when I really need it.
Toilet paper manufacturers have been criticised for not making more smaller pack sizes but of course their production lines aren’t very flexible. Supermarkets have been prevented from breaking up bulk packs into 1-4 roll quantities because of the extra handling. At least our nearest paper mill has put on extra shifts to keep their machinery humming 24h/, so the shortage must surely end soonish.
I well remember that kind of “toilet paper” from my youth, but in the UK it’s been many years since I came across it. Still, the rolls available in most public or commerical loos are not well suited to home use.
Another item that has largely vanished from shops in the UK is flour. Presumably, a lot of people have switched to or increased their home baking -- even though bread and cakes are still readily available.
Then, there’s stuff like this:
https://www.abc.net.au/news/2020-04-15/supermarket-shopper-tries-to-return-coronavirus-hoardings/12149548