It’s easy to laugh about it now but panic-buying has never truly gone away as much as shifted form. Between supply chain disruption and the rising impact of inflation on the cost of transportation and raw goods, we see news of shortages in everything from baby formula to feminine hygiene products.
Waves of “panic buying” now also occur with incredibly regularity. Target TGT, CVS CVS, Walgreens WBA and Kroger KR all placed limits on purchases of baby formula to prevent single customer buy-outs and profiteering.
“This is a shockwave going through the supply chain,” Hannah Kain, the chief executive of global supply-chain services provider ALOM, told TheStreet. “CEOs and the boards are seeing the the empty shelves and getting a lot of negative PR about the empty shelves.”
TheStreet talked to Kain about which items are in short supply and how panic around certain shortages can make the problem worse. The interview has been edited for length and clarity.
TheStreet: What are some of the common goods and items that are currently in short supply both globally and in the United States?
Kain: There is currently a paper shortage that is having a big impact not just on packaging materials but [also] shipping containers. There are a lot of shortages in the supply chain. Anybody putting products on the shelves is facing multiple barriers in which one or two of the items that are part of the product are in short supply.
TheStreet: Media coverage often focuses on a few very specific items but, in many ways, it’s the items we don’t hear as much about that cause the most disruption. Do you agree?
Kain: That is correct. This has been going for a really long time and impacts all the people who work behind the scenes to keep the product on the shelves.
TheStreet: How much of a role did the pandemic have to play in current conditions? What are some other forces that are at play in what we’re seeing?
Kain: The pandemic certainly accelerated [the shortages] and it did it in different ways. General consumption of certain things went up. When we were locked down during the pandemic, we started buying goods instead of many services. We didn’t go out to restaurants and we didn’t travel as much. There was a shift and that’s why all of a sudden supply of certain products went through the roof. It became hard to import things and you saw all these ships sitting in the ports.
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Then, of course, there’s the labor shortage. That’s impacting everybody in the supply chain or trying to find products on the shelves. And then there’s the regulatory environment that’s getting more and more strict.
That was what we saw with the baby formula and how many restrictions. All the contingency plans are getting harder to implement because it became much harder to get new suppliers, especially from overseas. The factories filled up and were not taking any new orders.
This is a shockwave going through the supply chain. CEOs and the boards are seeing the the empty shelves and getting a lot of negative PR about the empty shelves. What we’re seeing now is that the supply chain is playing a big role in whether a company is profitable or not. This was not something that anybody talked about just a couple of years ago.
TheStreet: On the part of the consumer, it feels like the pandemic is long behind us. Can you tell us a bit about why any disruption can be difficult to restart?
Kain: With factories and the labor shortage, things take a long time to even out. We’re actually seeing this in China right now where there was this big lockdown of 355 million people. And as the factories come back, they are not getting the materials they need or the components they need to start producing the goods again.
There is also the issue of transportation. The entire trucking industry has been in distress for many years. Any disruption has a ripple effect that can go on over the course of years. The war in Ukraine had a really big impact [on the supply chain.] The best organizations and the best supply chain professionals are making contingency plans to work around this problem but in the end, there are going to be disruptions.
TheStreet: Panic-buying is a common human response to hearing that certain items may be in short supply. How much is that panic justified?
This is more of a moral issue but I think that, when there is shortage of things critical to health, we all have an obligation to limit our purchases to what we really need. For both consumers and businesses, rethinking what you have at home and what else you can get is certainly an interesting thing to think about.
For most things, we can find a substitute product. If you cannot get one type of vegetable from Mexico because of drought then you can eat another type of vegetable or something else. But when it comes to critical things like medication or baby formula, it’s not so easy to substitute and that’s when [those choices] get to be really critical.
TheStreet: Can panic-buying have an impact on actual supply of certain items? Are some shortages artificially created?
Kain: Definitely. It always happens psychologically [that] when you’re uncertain about things you want to be on the safe side so you overbuy a little bit. Over time that may even out or we many have created a generation of people who always want to be safe.