As more businesses reopen in Iowa, a supply chain management expert at Iowa State University predicts more disruptions and shortages are coming, much like we saw with toilet paper and cleaning supplies in recent weeks.
Scott Grawe, associate dean of the ISU College of Business, says rebounding from the coronavirus pandemic won’t be as simple as switching on the neon “OPEN” sign. “One of the challenges a lot of these businesses are going to face is trying to figure out how many people are going to be coming back into these businesses,” Grawe says. “Whether it’s a restaurant or a retail business, as they try to predict their inventory levels and what they’re going to need to serve their customers, there’s a great deal of uncertainty and uncertainty is one of the biggest enemies to an efficient supply chain operation.”
A few months ago, the demand for toilet paper and cleaning products in Iowa and nationwide was quite steady. With the sudden spike in demand, those items quickly became almost impossible to find. While some of the hysteria has died down, Grawe says significant problems remain in the supply chain, especially with toilet paper.
“One of the supplies that goes into creating toilet paper is recycled office paper and as people spend less and less time in their physical offices, there’s less recycled paper to be used,” Grawe says. “They’re not just necessarily dealing with a demand issue but they’ve got a supply issue as well.”
Like with the run on toilet paper, Grawe says it’s very difficult to predict consumer behavior. While there’s much outcry for restaurants and retailers to reopen, he says it’s not certain whether customers will return — and oversupply could rapidly become a problem.
“Although there’s a huge demand for these restaurants to open back up, if the people don’t actually show up and if they’re a bit more nervous about setting foot inside those restaurants, restaurants could be forced into a situation where they’ve ordered more food than what they’re actually able to deliver and sell to the customers,” Grawe says. “That’s a big investment that they’re not going to be able to get their return on.”
Since there are no case studies and there’s no past experience to help guide this recovery, Grawe says it’s very difficult to predict what new troubles may loom. Grawe says, “Supply chains thrive on predictability and yeah, there’s a lot of uncertainty with regard to what the next thing, what the next ball to drop might be.”
While it’s hard to see farmers leaving vegetables to rot or dumping milk, when food pantries are seeing record demand, Grawe says it’s often the most cost-effective option. Donating milk or produce to those in need isn’t so simple, Grawe says, as most food banks aren’t set up to take in huge quantities, especially food that needs temperature control.