The UK has experienced several temporary shortages in essentials since the pandemic began.
In recent weeks, disruption to normally highly efficient supply chain systems helped cause petrol shortages at the forecourt across the country.
Data shows that a rapid change in customer demand — panic buying — led to steep falls in fuel stocks kept at petrol stations.
Normally independent forecourts operate with their storage tanks around 40% full.
But at one point during the crisis weekend, fuel levels fell to 16.6% on average, according to EdgePetrol, a supplier of real-time data to independent forecourt operators.
Experts in logistics suggest that bottle necks in the supply chain, such as a shortage of HGV and fuel tanker drivers, have prevented a quick restoration of stock levels.
The industry says petrol stations in the UK have built their business model around what is called ‘just-in-time’ (JIT) systems.
Created in the 1940s by Toyota to manufacture cars, the practice has been deployed globally in virtually every industry.
Companies receive their raw materials as close as possible to when they are needed. The lower storage time lowers their cost and makes goods cheaper for consumers.
But the efficiency and savings also increase the fragility of the supply chain.
“Just in time supply chains work well when there is certainty in customer demand,” says Mark Johnson, professor of operations management at Warwick Business School. “But any time you then have a change in demand, as we see now, coupled with a change in supply because of labour shortages, there are fundamental issues for supply chains.”
The temporary closure of a large carbon-dioxide supplier was a cause of concern almost immediately for those in the soft drinks industry. Companies in that sector maintain sufficient supplies of CO2 to last only a few days.
Similarly, petrol stations have developed a business model which relies on being resupplied just before they go dry. Some forecourts, operated mostly by supermarkets, are resupplied multiple times a day.
Supermarkets sell 45% of fuel in the UK. So far they have not released any data about their fuel supply levels.
On average, every time we fill up we buy 24.5 litres at independent petrol stations. But as panic buying set in, this increased by 22% to 29.82 litres, according to EdgePetrol’s data.
The relatively small increase (just over 5 litres) in the average person’s demand, coupled with a near tripling in the number of customers in a very short time led to shortages across the across the system.
Data from the Google-owned navigation company Waze shows that from 22 September to 29 September, there has been a 190% increase in people driving to petrol stations in the UK.
Ru Roberts, UK Country Manager at Waze said: “As disruption to fuel supply continues into the second week, we are still seeing bumper-to-bumper traffic at petrol stations.
“In some areas, speeds have slowed to as low as 2mph as drivers wait in line to fill their cars.”
So can the UK increase its resilience and prevent such mismatch in supply and demand in the future?
Reducing fragility in the supply chain means companies will need to give up some of the efficiencies of just-in-time and hold more stock.
“If firms revert to holding more stock, this will increase their operating costs, with knock-on effects for consumer prices,” said Dr Anthony Flynn at Cardiff Business School.
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