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Grocery store rationing is back, but relax: The supply chain is doing fine

By Sam Dean, Los Angeles Times on

Published in Business News

Hard times have returned to the nation's toilet paper aisles.

With coronavirus cases and lockdowns once again on the rise, shoppers are reverting to the panic-buying patterns of the early days of the pandemic. In response, grocery companies such as Target, Kroger and Albertsons have reinstated purchase limits on toilet paper, paper towels and cleaning supplies.

But this time, the grocery companies say, they're putting limits in place specifically to avoid the empty shelves many consumers faced in the spring — and industry experts say the grocers and suppliers are prepared for the winter wave.

"We put the limits on out of caution," said Kevin Curry, president of Albertsons' Southern California division, who noted that the current uptick in demand is nowhere near what he saw in March and April. "The supply chain's in a better position to handle this rush."

Over the summer, the industry put a number of measures in place to adjust to a new normal of high-volume grocery shopping and waves of lockdown-related shopping sprees.

Among them, stores and suppliers have started keeping more inventory on hand, when possible, to prepare for unpredictable spikes in demand.

 

The industry has "gone from a just-in-time mentality to a just-in-case mentality," said Willy Shih, a professor at Harvard Business School who studies manufacturing supply chains. Companies have spent the last few decades trying to reduce inventory, in pursuit of a world in which raw materials arrive at factories in the morning, leave as finished goods at night and are sold out on store shelves the next day, with no surplus lying around at the end of the process.

The just-in-time model relies on using past data to forecast demand and flexible logistics networks to adapt to predicted shifts. It falls apart, however, when the unpredictable strikes on a global scale.

Nick Green, chief executive of Thrive Market, which sells mostly organic food and health products, said he has laid in extra supplies to prepare for this new wave of shopping.

"In an ideal world, and nine months ago, we were holding tens of millions of dollars less inventory than we are today," Green said.

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