Cables, chicken, pizza boxes: Supply chain disruptions forcing Bloomington businesses to adjust

EDITOR'S NOTE: This is the first story in a three-part series on the COVID-19 pandemic's impact on the local availability of goods, services and employment opportunities. Part two discusses how local businesses are adjusting to the labor shortage. Part three looks at the impact on one major Bloomington employer.

Global supply chain constraints during the COVID-19 pandemic have caused local shortages of products ranging from cables and chicken livers to paint, pizza boxes and powdered sugar, Bloomington business owners said.

The paucity has required even greater flexibility and creativity than normal: Some local restaurants have had to adjust their menus. Others are stocking up on nonperishable items. But in some cases, the vendors — and customers — simply have to wait.

“At any given moment (for) anything we order ... our main (supplier) is apt to say, ‘I can’t get you this, but I can get you an alternative,’” said Ed Schwartzman, owner of Bloomington's BuffaLouie’s restaurant.

Before the pandemic, if Schwartzman ordered 100 items, he would get 100 items, he said. Now, he might get 95 or 90.

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Jeremy Ness, co-owner of Bloomington cookie restaurant Baked, said he has struggled to find items including disposable gloves, cleaning supplies and pizza boxes. He has responded by increasing his inventory. Rather than keeping a one-month supply of the boxes Baked uses for cookies, he now keeps six months’ worth.

Patrick Fiore, co-owner of French restaurant Le Petit Café, said he has had a tough time replacing an air conditioner, finding a certain type of glossy paint and, occasionally, sourcing chicken livers, a critical component of one of the cafe’s favorites, chicken liver pate.

Greg Briles, a salesman and technician at Stansifer Radio Co., said wires and cables, most of which are made in Asia, are still difficult to find. Gaylord Shepherd, owner of Bloomington Appliance Parts, agreed, saying that lots of electronic parts sourced in South Korea and China have much longer lead times than before the pandemic.

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An Indiana University professor said businesses across the country are dealing with similar challenges because during the pandemic, the supply and demand curves for many products have moved in interesting and unexpected directions.

For example, early in the pandemic, consumers experienced a shortage of toilet paper, which seemed odd, given that COVID-19 didn’t compromise people’s gastrointestinal fortitude.

But rather than reflecting a medical symptom, the toilet paper demand spike was a result of many more people working from home rather than the office, said Kyle D. Cattani, professor of operations management and chair of the full-time MBA program at IU’s Kelley School of Business.

Under normal conditions, a significant amount of toilet paper goes to businesses, which tend to buy high volumes and low quality, but when many places of business shut down during lockdowns, and more people did their business at home, demand shifted toward higher quality toilet paper in smaller quantities. And toilet paper manufacturers struggled to adjust to that demand shift.

Demand rises, supply falls

During the pandemic, economic uncertainties also induced people to guard their cash more carefully. And in some cases, even when they wanted to, they couldn’t spend money on services — hotels, flights, restaurant meals, etc. — so they pivoted to durable goods they could use at home, such as toasters, treadmills and televisions. That demand curve got even steeper because of federal stimulus dollars.

“The demand for physical goods has just soared,” Cattani said.

And it soared at a time when production at many facilities declined because of pandemic-related labor shortages and shutdowns, especially overseas, where fewer people tended to have access to vaccines once they became available.

In some cases, weather worsened the situation, Cattani said. Taiwan experienced a severe drought, undermining semiconductor production, which requires a lot of water. Semiconductors can be found in thousands of items including cars, appliances and gaming consoles. Increasing semiconductor capacity takes a long time and costs a lot of money, Cattani said.

As semiconductors are used in autos, toys and other durable goods that are still in high demand, Cattani said he does not expect the shortage to abate until well into 2022 at the earliest.

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At the same time, short-staffed ports have struggled to keep up with containers being brought in from overseas. Labor shortages in other parts of the transportation infrastructure, such as trucking and warehousing, have created additional bottlenecks.

“So you have all kinds of things going on,” Cattani said.

As long as shortages remain, local businesses will have to find ways to adjust, he said.

For restaurants, it may mean more substitutions: Romaine rather than iceberg lettuce, for example, or red delicious apples instead of galas. Restaurant owners also can use price incentives or offer specials featuring food items of which they have an ample supply.

Local business operators are taking exactly those steps.

When Fiore, of Le Petit Café, runs out of chicken livers, he offers a scallop pate instead.

Schwartzman, of BuffaLouie’s, said he, too, has had to make adjustments, though that’s getting more difficult because of inflation, which means that products — and their alternatives — are getting more expensive.

“It’s a very tough economy right now,” he said.

Ness, of Baked, said he has secured additional suppliers to increase his chances of finding the items he needs.

“Be as creative as you can,” he said.

The restaurant owners said that customers, for the most part, have been understanding — in part because they know just about everybody else is dealing with the same challenges.

Some constraints to remain

Despite business owners’ creativity and resourcefulness, Cattani said in some cases, they’ll just have to go without.

“Some products will just be hard to find,” he said.

Shepherd, of Bloomington Appliance Parts, knows that all too well.

Last November, he ordered a replacement silverware basket for a dishwasher. It didn’t arrive until this summer. He said at the height of the pandemic, a lot of people were staying home more and using their dishwashers more often. That caused greater wear and tear on components — and more people ordering replacement parts.

Thankfully, he said, some of those bottlenecks have eased.

Cattani said consumers, at least in the short term, have to reset their expectations about what products they can find and in what time frame.

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People who have a certain present in mind for Christmas certainly should not expect to be able to pick it up on Dec. 23. Finding that special gift might take a bit more sleuthing, a few more phone calls or a few more pecks on the keyboard.

“We’ve been spoiled ,,, over the last two to three decades,” Cattani said, “and (now) we’re a little less spoiled.”

The professor said he expects other supply chain constraints to weaken over the next few months, especially at grocery stores — but he warned the improvements will depend in large part on the path of the pandemic.

“There is some uncertainty there,” he said.

Cattani said he expects the recent challenges will also force businesses to reshape their supply chains to some extent. Over the past few decades, businesses have largely moved to a “just-in-time” delivery model, where they keep inventory low to avoid spoilage and obsolescence and where they stretch supply chains across the globe to keep production costs low.

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However, during the pandemic, that model lacked resilience. Cattani said he has thought for a long time that companies underestimate the cost of sending production offshore because they usually exclude from the calculation the cost of uncertainty.

The professor said as a result of the pandemic challenges, companies may shorten and diversify some supply chains, increase their inventory and even bring production of some strategic components back into the United States, including, he hopes, computer chips.

Coming next: How local businesses are dealing with labor constraints.

Boris Ladwig is the city government reporter for The Herald-Times. Contact him at bladwig@heraldt.com.

This article originally appeared on The Herald-Times: Bloomington businesses adapt to US supply chain shortage, COVID impact