Volcanoes in Iceland, earthquakes in Japan, tsunamis in the Indian Ocean. The past 20 years have seen plenty of natural disasters disrupt supply chains around the world. Yet, nothing compares to the havoc wreaked by coronavirus. While China, South Korea and other countries are beginning to emerge from self-imposed quarantines, much of Europe and the US remains in the pandemic’s grip and, in some instances, that is creating a chokehold on supply during a time of overwhelming demand. For example, sales of hand sanitizers have soared more that 800% in the past few weeks as health care fears grow (see charts). At the same time, nearly every company in our industry is producing hand sanitizer, which is creating tremendous pressure on alcohol and carbomer manufacturers.


“I’ve been wheeling and dealing with alcohol suppliers,” Cosmetic Solutions COO Warren Becker told Happi. “I’m talking to gasoline manufacturers, distilleries and even companies in the printing business to secure supply.”
 
Last week, Lubrizol announced it increased production of Carbopol polymers, a thickening agent found in most hand sanitizing gels and cleansing applications, to assist with the global fight against COVID-19.
 
Since early January, Lubrizol has modified and expanded its production, and consulted with customers on new formulations, allowing it to triple the amount of hand sanitizer ingredients it can supply its customers. This will enable 1 billion bottles of hand sanitizer every month to be delivered to the healthcare industry, first responders and consumers around the world. Two years ago, Lubrizol proactively made the decision to invest more than $20 million USD to increase supply capabilities. The expansion was expedited earlier this year and is now complete, months ahead of schedule, enabling the ramped-up production of Carbopol.
 
“Across the globe, hospitals, as well as the consumer market, are facing an unprecedented shortage of hand sanitizer,” said Bernardo Medeiros, general manager of Lubrizol Life Science, beauty and home. “Consistent with our message to improve lives, we have collaborated with our key customers, suppliers, partners and our global logistics network to provide the essential ingredients and solutions to help fight this pandemic. The use of Carbopol is just one example of how Lubrizol is leveraging its science to support COVID-19 needs globally.”
 

Lubrizol says it will continue to explore ways to meet customer needs during these extraordinary circumstances without compromising its focus on keeping its workers safe and minimizing the spread of COVID-19. Its applications team is available to discuss alternative formulations using different grades of Lubrizol’s Carbopol polymers. 
 
According to Becker, the supply picture has changed dramatically in the past month. And so has production. On March 1, like other household and personal product industry companies, Cosmetic Solutions began producing hundreds of thousands of units of hand sanitizers. Now, Becker’s company is producing up to 200,000 units of hand sanitizer a week.

“We’re making gels, spray applications and foams, as well as working on antimicrobial creams and lotions,” he added.

At the same time, Cosmetic Solutions continues to produce upscale skin care products, but Becker predicts that when coronavirus falls off the front page, there will be a surge in demand for a variety of skin hygiene products.

Meanwhile, while one personal care supplier agreed that isopropyl alcohol and carbomer supplies are extremely tight, China appears to be opening up to exports again. Unfortunately, as the virus spreads, India is closing is ports. 

In a rapidly deteriorating situation, industry trade associations are doing their part to help members get through the pandemic.

For example, the American Cleaning Institute (ACI) is urging government leaders to recognize critical manufacturing, especially the cleaning product supply chain, as “Essential Infrastructure” during the coronavirus crisis.

ACI joined a coalition of more than 60 associations in calling on federal, state and local officials to “coordinate a unified, clear and public framework that clearly explains that food (for human and animal consumption), beverage and consumer packaged goods manufacturers are exempted from the gathering and curfew bans that are starting to take effect,” said the groups’ letter to President Trump and numerous other leaders.

“ACI has been working with our partner associations on several pathways to ensure that our industry is confirmed as being a part of the critical US infrastructure, that our facilities can continue to operate and that employees can access these facilities,” said Melissa Hockstad, president and CEO, ACI.

In a letter to the Justice Department and the Federal Trade Commission, ACI encouraged officials to continue their crackdown against price gouging and “to police those who seek to exploit access to cleaning products and their ingredients in response to the global outbreak of COVID-19.”

“ACI members are increasing production and operating around the clock to produce these preventative products to protect individuals from the spread of COVID-19 and to meet the dramatic expansion in demand,” Hockstad wrote.

“To be clear ACI does not support ‘price controls’ as they often do not take into account the changing cost of raw materials used to make the products. In addition, we also ask that you coordinate and collaborate with federal, state and industry partners to take all possible actions to address those sellers that engage in this illegal activity.”
 
Dr. Steve Bennett, senior vice president of scientific and regulatory affairs, Household and Commercial Products Association, noted that the coronavirus pandemic has caused supply chain issues that can reasonably be expected due to the high demand for certain goods, especially cleaning products, disinfectants and hand sanitizer. He pointed out that while manufacturers are prepared for situations like this, the Environmental Protection Agency (EPA) and Food & Drug Administration (FDA) have also stepped up to help alleviate supply chain disruptions. 

“For example, the EPA recently announced that they will temporarily allow manufacturers of already-registered disinfectant products to obtain certain active commodity ingredients from any source of suppliers without first checking with the Agency,” he noted. “Similarly, the FDA has taken several measures to open up other sources of ethanol, a key ingredient in hand sanitizer, to assist with supply constraints.  

According to Bennett, these steps will certainly help manufacturers access the ingredients needed to make products that can be used against COVID-19. He noted that it is critical that these products can continue to be manufactured and distributed to supply the health care, foodservice and consumer-related facilities and businesses that are on the front lines of this pandemic.

“Thus far, supply chain issues have been manageable, and government agencies and industry have worked together to implement practices to help mitigate supply disruptions,” Bennett concluded. “However, it’s difficult to predict how this pandemic will evolve since there are so many uncertainties surrounding the severity and duration of the outbreak.”



About that TP…
 
Enough about isopropyl alcohol, what about all that missing toilet paper? A recent Marker article concludes it’s not hoarding that’s leading to empty store shelves, it’s an allocation issue. With more people working from home, they’re not going to work; more importantly, they’re not going AT work. According to the authors, the company that makes toilet paper for commercial applications is not the same as the one making toilet paper for consumers. 
 
And that is turning into a royal pain-in-the-you-know-what for paper suppliers, their customers and consumers. According to paper company Georgia-Pacific, the average household will use 40% more toilet paper than usual if all of its members are stuck at home all day and all night. Now, it’s too late for this pandemic, but there are long-term solutions to supply chain issues.

But toilet paper isn't the only fast-moving consumer good in short supply. According to Euromonitor International, 11% and 24% of essential product SKUs were out of stock online in the US and Canada, respectively, on April 2, 2020. Euromonitor's definition of essential is a basket of product categories from across all 10 fast moving consumer goods (FMCG) industries shown that have been determined to be essential necessities based on their econometrically estimated income elasticity of demand and qualitative input from Euromonitor International’s research teams.
 

Next Time
 
One solution, according to authors of a recent article in the Harvard Business Review, is supply chain mapping, a long, tedious, expensive project that can reap huge benefits, according to the authors, Thomas Y. Choi, Dale Rogers and Bindiya Vakil. They say teams from procurement, logistics and supply-chain financing must identify and fix key gaps in information, people and processes to prevent disruptive events in the future and align the goals of procurement with the overall business objectives.
The authors rightly note that when a disaster strikes, everyone up and down the supply chain suffers. Therefore, it only makes sense that firms should incorporate disruption-related metrics in their evaluations of suppliers. When selecting a supplier and writing the initial contract, many leading companies include language that requires the supplier to participate annually in its supply-chain mapping efforts. When force majeure events like the current pandemic strike, those supply maps can be used as a roadmap to solutions to the crisis. Contracts should also spell out expected recovery times and methods during such events.

“After the COVID-19 crisis dissipates, we will see companies fall into one of two categories,” the Harvard Business Review authors note. “There will be those that don’t do anything, hoping such a disruption won’t ever happen again. These companies will be taking a highly risky gamble. And there will be firms that heed the lessons of this crisis and make investments in mapping their supply networks so they do not have to operate blind when the next crisis strikes and rewrite their contracts so they can quickly figure out solutions when disruptions occur. These companies will be the winners in the long term.”

Yes, but thinking long-term during a crisis and after a crisis has passed, takes discipline, something most people and businesses lack.