Like many of you, I’ve wandered past the toilet paper aisle, seen the Venezuelan-style devastation, and wondered “what the flaming hootie-hoo are people DOING with all the TP? Are they fixing to eat the stuff?”
Well, no. Hoarding isn’t the problem. A supply chain built on maximum efficiency and minimum reserve inventory – pretty close to “just in time”, in logistical terms – and a re-balancing of home and commercial sales (less TP at work, much much more at home) has left the toilet paper market way out of whack:
“If you’re looking for where all the toilet paper went, forget about people’s attics or hall closets. Think instead of all the toilet paper that normally goes to the commercial market — those office buildings, college campuses, Starbucks, and airports that are now either mostly empty or closed. That’s the toilet paper that’s suddenly going unused.
So why can’t we just send that toilet paper to Safeway or CVS? That’s where supply chains and distribution channels come in.
Not only is it not the same product, but it often doesn’t come from the same mills.
Talk to anyone in the industry, and they’ll tell you the toilet paper made for the commercial market is a fundamentally different product from the toilet paper you buy in the store. It comes in huge rolls, too big to fit on most home dispensers. The paper itself is thinner and more utilitarian. It comes individually wrapped and is shipped on huge pallets, rather than in brightly branded packs of six or 12.
“Not only is it not the same product, but it often doesn’t come from the same mills,” added Jim Luke, a professor of economics at Lansing Community College, who once worked as head of planning for a wholesale paper distributor. “So for instance, Procter & Gamble [which owns Charmin] is huge in the retail consumer market. But it doesn’t play in the institutional market at all.”
It’s sort of like the shortage of .22 Long Rifle ammunition in the early 2010s; accelerated purchasing threw the supply chain out of whack, and since production was inelastic, it stayed out of whack for a long, long time.