Supply Chain Matters calls reader attention to a no-doubt interesting twist on a supply chain related shortage involving a very notable consumer goods manufacturer.
The Wall Street Journal published a report: Walmart Sparks Panic and Confusion in the Dish-Soap Aisle. (Paid subscription required or complimentary metered view) The report indicates that consumer product goods manufacturer Procter & Gamble apparently encountered a select supply disruption in the company’s branded Dawn and Gain dish washing soaps, which reportedly control 60 percent of the dish detergent market.
However, the opening paragraph of the report indicates that P&G did not make enough dish soap and Walmart is letting its customers know about it.
Walmart, one of the largest U.S. retailers reportedly informed its shoppers of this condition by prominently displaying signs in its stores warning customers of a “national supply shortage.” That in-turn, prompted customers to post images of said signs on social media below shelves literally stocked with the dish detergent, questioning if there really was a national shortage.
Adding to the drama, competing retailers posted that they had ample supplies of P&G dish detergent.
Obviously not pleased by these events was P&G itself, concerned that a run on shelves would exacerbate a legitimate temporary glitch in available supply. A Walmart spokesperson acknowledged to the WSJ that a national shortage of dish detergent was evident, and shoppers should expect shortages through the first of December. Yet, there remains little evidence that Walmart’s competitors are experiencing a similar disruption, including statements from Target Corp. and other cited retailers indicating no reason to believe in a shortage.
Obviously, what makes this development perplexing are three issues. First, retailers usually do not post a shortage sign on a shelf completely stocked with product. One would surmise either consumer confusion or a herd mentality to buy extra while its available.
The second is what are readers week know as supply chain segmentation strategy, where a key influential retailer such as Walmart is granted priority supplies of a product to reinforce the importance of that retailer in overall sales volume. The WSJ cites industry data indicating that upwards of 15 percent of P&G overall consumer product sales stem from this particular retailer, thus the overall influence. In the specific case of Walmart’s store stocking strategies, the retailer demands a lean inventory presence with continuous store replenishment cycles.
Third, these two partners have had a prior history of squabbles mostly related to negotiations relative to preferred brand pricing, supply and promotional needs. With the ongoing boom in online retailing involving everyday consumer staples, a manufacturer such as P&G must also respond to the needs and influence of Amazon, as well as other online retailers pitching same-day or one-day delivery. Like other national consumer product goods manufacturers, there are dedicated account and replenishment teams focused on Walmart and other highly influential retailers. Their joint performance is predicated on meeting joint objectives, which can sometimes be at odds.
P&G responded to the Journal by citing the shortage as a “short-term inconvenience” without commenting on the origins of the shortage, further indicating that all soap varieties would soon be available. Noted was: “For a brief period, demand exceeded what we were able to supply, but this was temporary.”
For supply chain management teams, this development reinforces the increased demands that key retailer customers can influence, even with a manufacturer as large and as influential as P&G. Years of experience and history of managing an account such as Walmart presents somewhat of a family analogy. Some days we all get along and have fun, and some days we can tend to disagree, especially one of the family members may act a bit out of the norm.
One takeaway is certain, online and in-store consumers are indeed highly sensitive to product availability, and in the era of round-the-clock social media cycles, even a proactive attempt to prepare for short-term product shortages can be taken to the extreme.
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