A Flexible & Immune Supply Chain for the Hygiene Tissue Industry
By Ronalds W. Gonzalez and Franklin Zambrano
This blog post reflects my recent conversations with recycled fiber supply chain operators in the hygiene tissue industry in Europe, North America, and LatAm regions.
My colleague Dr. Robert Handfield recently introduced the term “supply chain immunity” as an alternative to resilient supply chains. Resilient supply chains mean “minimizing damage and the time taken to return to a normal state of operations” . In some specific contexts, resilient supply chains might imply the loss of lives in the interim that the supply of goods and services is re-established. In other less dramatic circumstances, resilient supply chains can also mean a shortage of essential products for daily life, and might, very likely, imply negative effects to a company’s P&L as it adapts to the limited sourcing alternatives. On the other hand, immune supply chains describe the idea of a supply chain that can resist significant events (e.g., pandemics, earthquakes, financial crises) and still serve our production systems.
Now, in the framework of the hygiene tissue industry, there is an additional feature to an immune supply chain that needs to be present: flexibility. I invite you to think about flexible and immune supply chains and, more specifically, flexible sourcing programs. Let’s use fibers as the subject to discuss and illustrate these concepts:
COVID-19 pandemic has caused significant disruptions to global and local supply chains. In particular to the hygiene tissue industry, we have previously discussed (March 2020) that the production of hygiene tissue has not been affected at all in North America, and that the shortage of tissue paper on the shelves is the result of consumer nervousness. Basically, consumers are buying more than they need in an industry with very lean supply. By the end of May 2020, we witnessed how product availability in stores increased (consumers have stopped buying more than they need).
Yet the pandemic is affecting the availability of specific fiber grades used in the manufacturing of hygiene tissue with major effects observed for recycled fibers. Fiber sourcing managers are seeing temporary shortages and price increases for recycled fibers in Europe, LatAm, and to a less extend in NA. Some of the bottlenecks in the supply of recycled fibers are caused by issues in the collection, attributable to shifts in purchasing channels from stores to e-retailers (as a consequence of current state-of-affairs), in addition to reduced curbside collection, which had been previously impacted by China’s trade policy.
The impossibility to secure steady volumes of specific recycled fiber grades bring up the need to create flexible fiber sourcing strategies. Flexible sourcing programs will help companies to reduce not only the impact of temporary market dynamics effects but also the likelihood of disruption in production systems when natural disasters occur.
Such flexible sourcing programs can be established by creating different pulp formulas (various types of fibers at different ratios and refining levels), which have been carefully combined to attain well-defined metrics such as product performance (i.e., softness, absorbency, strength), manufacturing costs and sustainability. Adoption of flexible sourcing programs will enable sourcing and production managers to proactively switch the type of fibers used to manufacture their products when foreseen market conditions are not favorable.
The Tissue Pack Innovation Lab (www.go.ncsu.edu/tissue) at NC State University has been working to create a multidimensional database that connects different types of commercially used, under-used, and alternative fibers with product performance –. The development of such programs needs to consider facilities configuration and capacities while identifying strategic opportunities for cost reduction. Building a flexible sourcing program in partnership with NC State University, which might be useful for the next ten years might cost ~USD 150k, yet it will help manufacturers to avoid losing millions of dollars per year.
Immune and flexible sourcing programs will be of great need to face the increasing impact of global megatrends on the hygiene tissue industry –, as well as the occurrence of future natural disasters. If you do nothing, you are set to lose tens of millions of dollars every year in and year out.
 R. Handfield, “Supply chains need to develop immunity to natural disasters,” London School of Economics Business Review, 2020. .
 N. Hensley et al., “Is Sustainability Shaping the Hygiene Tissue Industry?,” PaperFIRST, 2020.
 R. Gonzalez et al., “Mapping Drivers for Value in The Tissue & Towel Industry,” Tissue Day Symposium 2018. Raleigh, 2018.
 Y. Wang et al., “Relationship between human perception of softness and instrument measurements,” BioResources, vol. 14, no. 1, pp. 780–795, 2019, doi: 10.15376/biores.14.1.780-795.
 T. De Assis et al., “Performance and Sustainability vs. the Shelf Price of Tissue Paper Kitchen Towels,” Bio Resour., vol. 13, no. 3, pp. 6868–6892, 2018.
Hygiene Tissue Shortage
By Ronalds Gonzalez
I have been asked about the lack of bath tissue paper in the stores, this is what I’m seeing in the industry:
1. More than 98% of tissue products are manufactured in the U.S.
2. Production is located in remote areas with a low population density
3. Fibers are produced in the U.S. with exception to Eucalyptus, which is produced in Brazil, and the import of Eucalyptus from Brazil is “business as usual”. Also, the recycled fiber is collected in the U.S.
4. The production and supply chain of hygiene tissue paper is robust with very low risk to be disrupted
5. Why are there few inventories in the store? People are buying more than they need.
6. Tissue market in normal conditions is very competitive and saturated.
7. There are two big segments, consumer tissue (found in groceries) and professional hygiene (found in offices). People are staying home; then there is a slight increase in demand for the consumer tissue segment and a reduction in professional hygiene segments. The latter are positioning production now in consumer tissue.
8. ALL tissue manufacturing facilities in the U.S. are fully operational (at full capacity)
9. In summary, consumers are experiencing nervousness, and they are buying more than they should, depleting inventories of an industry that is very lean.