Don’t panic (again): here’s why Melbourne’s supermarket shortages will quickly pass


Flavio Romero Macau, Edith Cowan University

You’re nervous, I get it.

Panic buying is back, not as strong as in March and more localised in Melbourne. Once again shop shelves have been emptied of pasta, toilet paper and other household items.

When will things get back to normal? Soon, more than likely in a matter of days, rather than weeks.

What is different now

Last time most of Australia was involved. Taken by surprise, supermarkets struggled with shoppers across the nation going into “hoard mode” simultaneously.

Normally supermarket supply chains run like well-oiled machines with highly predictable demand. Products move slowly and continuously from factories to distribution centres to stores. Supply chains are “skinny”, with stores ensuring they have just enough stock to meet that demand, particularly for low-margin products like toilet paper that take up a lot of shelf space.

A spike in demand can thus quickly empty shelves. It can prompt other shoppers to also start stockpiling, due to fear of missing out, making the problem worse.




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Responding to this situation in March took weeks, as supermarkets adjusted their orders and manufacturers ramped up production to supply more products. The supermarket chains used every trick in the book to balance supply and demand – including imposing limits on the quantity of products shoppers could buy at any one time.

What is happening

This time suppliers are more prepared. Their lean supply chains have built some fat. Inventory has not been at a minimum. Limits on the amount customers can buy have been quickly reintroduced.

So why are shelves empty at all if this time businesses are more responsive?

Well, one thing has not changed: there’s still a lag in supply chains responding to any sudden change in demand.

With toilet paper, for example, orders are generally fulfilled in about ten days. Last time it took about three weeks for more paper to make to it shops.

But, given the information of a spike in demand in Victoria made its way from shops and distributors to manufacturers almost instantly, things should happen faster this time.




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Retailers have already moved to answer the call by rerouting deliveries to increase supply where it is needed the most. The only thing stopping supply returning to normal is the speed of transportation and restocking.

Also, the spike in demand is heavily localised in Melbourne. While there have been reports of panic buying and stockpiling in other states, it’s nowhere near the level of a few months ago.

So shortages in Victoria will not be as prolonged as last time. Redirecting inventories will be a lot simpler.

Think of it this way. Panic buying during March was like a big detour in the supply-chain highway given the whole country was involved. Now it is more like a car with a flat tyre reducing traffic speed locally. It’s not less dramatic for the people affected, but much simpler from a supply-chain perspective.




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The new normal

So don’t panic. There’s less reason to join in the panic buying (or stockpiling, if you think of it as a rational response to lockdown) this time. We’re likely to experience these disruptions so long as COVID-19 outbreaks continue. The “new normal” is like a faulty switch. Regions will be on and off the spot until the pandemic is over.

But as long as the entire nation does not move backwards all at the same time, supply chains from one state will quickly support the one experiencing difficulties.

There’s really no reason for you to add to the problem.The Conversation

Flavio Romero Macau, Senior Lecturer in Supply Chain Management and Global Logistics, Edith Cowan University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

High-tech shortages loom as coronavirus shutdowns hit manufacturers


John L Hopkins, Swinburne University of Technology

There are now more than 45,000 confirmed cases of the coronavirus dubbed COVID-19 by the World Health Organization, and the disease has caused at least 1,115 deaths. The impact of the virus is now reaching way beyond public health: China is at the heart of global manufacturing, and as supply chains suffer, panic is beginning to set in.

In many provinces across China the government has urged hundreds of millions of workers to stay home to help reduce the spread of the virus. As a result, many factories have stayed closed since the Lunar New Year holiday in late January, halting the production of products and parts destined for countries around the world, including Australia.

Apple is one of the most high-profile companies affected, with its manufacturing partner Foxconn hitting a lengthy production delay, but they are far from alone.

Global supply chains, global problems

The sectors hit hardest appear to be high-tech electronics, pharmaceuticals and the automotive industry.

Globalised supply chains and just-in-time manufacturing mean many seemingly unrelated products are vulnerable to pauses in the flow of goods from China.

It only takes one small missing part to bring entire supply chains to a standstill. If a tyre manufacturer in the United States doesn’t receive valves from a supplier in China, a car plant in Germany won’t receive any tyres, and therefore can’t ship finished cars to its customers.

Something similar happened to automotive giant Hyundai, which had to suspend all operations at its manufacturing plant in South Korea due to a lack of parts from China.




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Even tech companies such as Samsung, Google and Sony, which have moved their factories out of China in recent years, are being affected. They still rely on China for many components such as sensors or smartphone screens.

It is not just large businesses that will feel these effects. Many small businesses around the world also source products and parts from China.

The supply of these is now uncertain, with no sign yet as to when normal service may resume. For products and parts that are still being manufactured in China, new enhanced screening measures at all Chinese border crossings are likely to cause further delays.

How will Australia be affected?

The effects of the coronavirus are also being felt in Australia. China is our largest trading partner for both imports and exports. According to the United Nations Comtrade database, Australian imports from China were valued at A$85.9 billion in 2018. The biggest product categories were electronics and electrical equipment, making up A$19.8 billion, and machinery, which accounts for another A$15.7 billion.

Moreover, 90% of all Australia’s merchandise imports are from China, and half of those are engineering products such as office and telecommunications equipment.

Besides the well-publicised impact on airlines, universities and tourism, Australian construction companies are warning clients of upcoming project delays as a result of forecast disruptions in materials sourced from China. Aurizon, Australia’s largest rail operator, has said the coronavirus will delay the arrival of 66 new rail wagons being made in Wuhan, the city at the epicentre of the outbreak.

Expect shortages of high-tech goods

Product shortages could also soon be visible on retailers’ shelves, with electronics stores such as JB Hi-Fi and Harvey Norman expected to experience significant disruption to their supply of computers, televisions and smartphones.

When shortages like this occur, customers will struggle to buy the products they want, when they want them. The only channels available might be third-party resellers offering highly inflated prices. In extreme cases, supply shortages like these can also lead to panic buying and stockpiling.

More uncertainty ahead

It is commonly said that “when China sneezes, the world catches a cold”. So what is the long-term diagnosis for the coronavirus breakout, and what will the economic symptoms be?

As so much is still unknown about COVID-19, with no vaccine or formal means of preventing it spreading having emerged yet, it’s too early to predict what the full impact will be.

For many industries the next few months will bring high levels of uncertainty, with disruptions certain to continue, before recovery programs can start to gain traction.

This is obviously a worry for many organisations, but could also be a period of new opportunity for others, as the world comes to terms with this latest global health crisis. Supply chains that are agile enough to react quicker than their competitors’, or those with more robust risk management plans, might find themselves gaining greater market share as a result of this crisis.The Conversation

John L Hopkins, Theme Leader (Future Urban Mobility), Smart Cities Research Institute, Swinburne University of Technology

This article is republished from The Conversation under a Creative Commons license. Read the original article.