Afternoon Coffee: Panic buying ramps up, but supply chain ready this time; Airlines to lose billions; Peloton’s supply chain issues

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As COVID-19 cases rise around the country and world again, consumers are going back to their panic buying ways (like toilet paper), but this time industry experts are better prepared for any supply chain troubles, according to the LA Times.

Stores and suppliers took the lessons from the spring panic to keep more inventory on hand to prepare for unpredictable spikes in demand, especially in certain products like toilet paper. There has been a shift from a just-in-time mentality to just-in-case mentality, Willy Shih, a Harvard Business School professor, told the LA Times. The last few decades, companies have tried to reduce inventory in pursuit of a world where raw materials arrive at factories in the morning, leave as finished goods at night and are sold out on store shelves the next day. There is no surplus lying around.

This model relies on using past data that forecasts demand and flexible logistics networks to adapt to predicted shifts. However, this falls apart with unpredictable strikes at a global scale lead to panic buying and heightened demand, like the coronavirus pandemic. Now, many companies are using vertical supply chains to fix any issues upfront, the article said.

Nick Green, CEO of Thrive Market, laid out extra suppliers to prepare for this next wave of shopping.

“In an ideal world, and nine months ago, we were holding tens of millions of dollars less inventory than we are today,” Green told the LA Times. “We went through six months of toilet paper in about six days back in the first surge.”

Airlines set to lose $157 billion this year and next

The International Air Transport Association (IATA) warned on Tuesday that airlines are on course to lose a total of $157 billion this year and next, according to Reuters.

The outlook reflects challenges that still plague the sector despite better news on potential COVID-19 vaccines. However, the IATA doesn’t expect this positive impact to come before mid-2021, the article said.

Peloton demand surges, leaving the company with supply chain problems

Peloton, the home-fitness brand, saw a huge surge in demand this year as the coronavirus forced gyms to shut down, but now the company is facing huge logistical and supply chain problems, according to the Wall Street Journal.

A Peloton spokeswoman told the WSJ that delays are primarily due to shipping logjams, especially at ports as the bikes are transported to the US from overseas manufacturers. Port delays are difficult to predict and resolve, leaving customers with no idea when their new stationary bike or treadmill will come.

In a letter to shareholders, Peloton acknowledged customers are struggling with delivery delays and “unacceptably long” wait times for customer-service help.

“We are doing everything we can to get our products to our prospective members as quickly as possible,” the letter said, according to WSJ.

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