Opinion

Guarding Against Product Shortages: Beware the Mistakes of March

Over the last few weeks, many retailers have imposed rations on high-demand goods, like toilet paper, paper towels and cleaning products. The psychology of empty shelves and the reminder of the panic-buying last spring is bound to make consumers anxious. 

We must not let anxiety give way to panic. Retailer limits are a result of lessons learned in March and April. Further, the consumer packaged goods industry — which makes the food, beverage, household and personal care products that are critical to Americans’ ability to stay home — is in a fundamentally different place than it was then.

In March, sales rose 21 percent over the year prior, the result of a dramatic increase in at-home consumption. While demand has leveled, industry purchases have been up around 10 percent for three of the last four months. The rise in COVID-19 cases across the country is likely to push demand higher once again and in concert with holiday demand will increase the pressure on an already stretched supply chain.   

CPG companies are doing everything possible to meet demand. They’re throwing out long-honed algorithms and building greater supply-chain resiliency. They’re running 24-hour shifts seven days a week and working with external manufacturers to increase production. 

But no industry can solve the demand needs alone. Governments at every level — federal, state and local — must be a collaborative partner, both with industry and each other. There has been important, effective action, like increasing trucking capacity by relaxing requirements around the Hours of Service rule and easing truck weight restrictions. There have also been bumps in the road, particularly early on when conflicting state and local rules led to issues with employees getting to work and trucks getting across state lines. 

As states start implementing new restrictions in response to the current spike in cases, we cannot repeat the mistakes made last spring. CPG employees are designated as part of the critical infrastructure by the Department of Homeland Security. Playing whack-a-mole with state emergency declarations that inhibit the production of critical goods is bad for consumers. 

Just last month, we saw New Mexico try to unnecessarily reinvent the wheel of critical infrastructure, restricting the operations of retailers that sell essential goods and thus limiting access to products Americans need. This kind of approach, however well-intended, creates panic. Panic intensifies problems into unmanageable territory. 

Right now, we must prioritize the continued production of the critical goods the industry manufactures. Critical to that production is appropriately prioritizing the industry’s essential workers for the COVID-19 vaccine. We have heard from some of our members that they are seeing call-outs of as much as 10 percent of their workforce due to contact tracing. Keeping this workforce protected keeps the supply chain running and keeps American homes stocked with essentials. 

It is never lost on our industry that we make the everyday items people rely on. The average American uses 42 CPG products a day — from toothpaste to toilet paper and coffee to cleaning supplies. Not having access to these products is not forgoing a luxury, it’s contending with a hardship. 

Limiting essential operations hurts the consumers who rely on our products. Let’s work toward solutions that increase, not inhibit, the production that guards against shortages — before retailers don’t have anything to ration. 

 

Geoff Freeman is president and CEO of the Consumer Brands Association. 

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