ASU business professors offer their take on recent consumer shortages
What do tampons and fireworks have in common? Well, the two items are in short supply as we approach our next federal holiday — Independence Day.
The global supply chain shortage due to the pandemic has shed light on how fragile everyday items we used to take for granted have now become a retail game of Whack-A-Mole.
And this month’s shortage du jour is a feminine product and a low explosive techno device used to celebrate the nation’s birthday on July Fourth.
ASU News reached out to a pair of university experts to explain why retail items keep coming up short: Hitendra Chaturvedi, a professor of practice in Arizona State University’s W. P. Carey School of Business and an expert in supply chain strategy, and Katy Keane, a lecturer in the W. P. Carey School’s Department of Supply Chain Management.
Both professors were not in short supply of answers.
Question: Why are many cities not going to celebrate July Fourth this year?
Chaturvedi: Less supply is coming from China. In many cases, less than 50% of what was ordered. This is because most of the fireworks are imported from China. Even in a country like India that celebrates DiwaliA religious festival that is also referred to as the "festival of lights." with fireworks, Chinese fireworks imports have decimated the local industry.
Q: Why are we just finding out about this news, given that July Fourth is just around the corner?
Chaturvedi: It is getting delayed and not coming on time. Shipping and transportation service levels are the lowest we have ever seen. If suppliers have not ordered their fireworks well in advance, then they are out of luck. More concerning is that products arriving after the fourth would have lost a huge value and the buyer in the U.S. will be stuck with expensive inventory that will have depreciating value. Fireworks are like newspaper, they have lot more value leading up to Fourth of July, and lose value rapidly after that. This phenomenon is the basis of a supply chain model called the newsvendor model.
Q: I’m assuming this will also impact the price?
Chaturvedi: Yes. Whatever is coming is expensive — 30–50% more expensive. Just the cost of a container has increased five times from $10,000 to $50,000. For cities that host fireworks shows, labor shortage is also an issue.
Q: What should consumers expect if there is a fireworks show somewhere?
Chaturvedi: Consumers should be ready to see less variety, and whatever they will get will be more expensive.
Q: The nature of supply chain shortages seems so random, such as the case with tampons. Can you tell us why there’s a shortage in this instance?
Keane: As with many products, getting raw materials from China (cotton and rayon) and the fact that each of the tampon manufacturers have only one U.S. production plant is the root cause of the problem. Any disruption to either raw materials or manufacturing results in serious inventory shortages.
China’s initial and continuing shutdowns due to the zero-tolerance COVID policy started the ball rolling. Labor disruptions impacted not only production but shipping out of the ports as well. To exacerbate the problem, U.S. factories and shipping were also impacted in the same way, and ongoing Omicron surges as well as labor shortages in the U.S. continue to drag on.
And as many of us hear of a shortage of things we need — like toilet paper — what do American consumers do? Stockpile! I will admit that I was one of those people that bought enough toilet paper for three months. I also bought bags of flour and a case of peanut butter. As if I were really going to start making bread and living on peanut butter sandwiches! Thus, many financially able women started stockpiling tampons.
Q: Which group or demographic will be the hardest hit by this shortage?
Keane: Once again, lower-income women will be impacted the most from this shortage. We call this “period poverty.” Tampons are not covered by public assistance programs (food stamps). There is an ongoing conversation about how large, male-led companies, as well as the government, do not focus as much on women-only issues. Did you know that the U.S. military doesn’t provide tampons to women stationed overseas?
Today on Amazon, the price for a 40-pack of tampons ranges from $16 to over $40, depending upon brand. Previously, the average cost of a 36-pack was $7. Manufacturers have had to raise their prices due to increases in cotton and rayon from China, as well as shipping costs. The average cost of shipping a container has increased over 300%. Getting the materials delivered to the plants as well as from the plant to the retailers requires trucks, and trucking costs have increased about 25% from 2019. Additionally, the U.S. continues to have a shortage of truck drivers, and we are paying the drivers more than ever before. Skyrocketing fuel prices have also contributed to cost increases.
Q: When do you anticipate this will be remedied and what should people do in the meantime?
Keane: Tampon supplies are slowly beginning to hit store shelves again. Recent marketing data states that last week, there was a 7% tampon shortage, especially in Arkansas, West Virginia and Jackson, Mississippi. Note these are the three lowest household-income states in the U.S. Sadly, women continue to need tampons each month despite the supply problem. And interestingly, the top two U.S. manufacturers will not provide supply chain data to the public.
So what’s a girl to do? There are other options, though perhaps not physically or emotionally as satisfactory. There are reusable menstrual cups and reusable pads. Cups are about $30 to $40. Clearly not as viable for lower income women. Washable pads cost about $16 and up for a pack of 10. But then you need to consider how often you need to wash them.
All in all, these supply issues are a continuing concern for the United States. We can continue to raise our voices and advocate for all women, especially those with lower incomes. Corporations also need to reduce risk and diversify their supply chains, as disruptions will continue to occur.
Top photo courtesy iStock/Getty Images