From altered consumer behavior to changes in market forces, the COVID-19 pandemic crisis has had wide-ranging and lasting effects on the tissue business.
Just a few short months ago at the start of the COVID-19 pandemic in the United States, news reports were filled with scenes of pandemonium at supermarkets and shelves emptied of cleaning supplies and — most critically — bathroom tissue. Tales of selfish tissue hoarders and desperate tissue searchers for that formerly bountiful commodity were daily media fodder.
The pandemic crisis placed enormous pressure on the tissue supply chain. But the sector proved to be remarkably resilient, and the pandemic has actually accelerated the pace of change within the industry. To assess the lasting impact of COVID-19 on the tissue business, Tissue World magazine hosted an online panel discussion June 23 with four industry experts.
Moderated by Jonathan Roberts, conference chair and content advisor for Tissue World, the panel included Kim Underhill, group president of Kimberly-Clark North America; Brian Allen director of cyber advisory services for EY, USA; Udaiyan Jatar, founder of Blue Earth Network, USA; and Ivo Kool, senior product development manager, tissue, paper, nonwovens for Sam’s Club, USA.
The discussion has been edited for length and clarity.
Roberts began the session by noting the panelists all came from North American companies. “That’s not a coincidence,” he noted, “As this event was born out of Tissue World Miami, which was postponed from March and is due to take place in November of this year.”
Roberts then posed his first broad question: “How is the tissue business responding in this extraordinary time?”
Kimberly-Clark’s Underhill noted three areas that have been challenging and required significant leadership: “One being, first and foremost, the safety and well-being of our people and keeping our mills running. We quickly moved into implementing safety protocols — masks, social distancing, temperature checks and the like. A lot of factories had to shut down, but our goal was to keep it running.
“The second challenge was the unprecedented demand,” said Underhill. “There are lots of theories about this hoarding of bathroom tissue, and why bath tissue and towels versus other categories. The clearest explanation was that people felt like they needed a little sense of control. All of a sudden something we take for granted in North America became something you could not imagine life without.
“The demand escalated very fast and the challenge became we were just out of stock, and it wasn’t just Kimberly-Clark, the industry was challenged because of the increase in demand, and we still see that, particularly in the U.S.
“The last challenge was how can we work with our retail partners to fix the supply chain. We realized there were parts of the supply chain we had to rework because it had never seen such extreme and quick consumer demand, which opened up a lot of challenges but also a lot of opportunities in thinking about our supply chain going forward.”
“From the beginning of March to the end of April I’d say purchases almost doubled and then slowly went down to about half,” said Kool of Sam’s Club. “It was quite amazing. A couple of trucks would arrive, we’d unload them, and the product would be gone within an hour or two because people would get on the phone and say, ‘Hey, it’s in town!’ And off everyone would go and buy it.
“But I really have to say for our private brand business, our vendors supported us unbelievably well,” Kool continued. “I mean, everyone pulled out all stops.”
Roberts asked Jatar of Blue Earth Network how industries beyond tissue responded to the pandemic.
“The big companies did a really good job, the best processes I’ve seen,” said Jatar. “They’ve done a really good job about keeping communication going, building public trust and managing personal health and business health. Trust-building and empathy are pretty important.
“The second thing is while I know we are talking about COVID, we have to consider what happened with the Black Lives Matter movement that highlighted the big gaps between the haves and the have nots,” he said. “Companies are recognizing that words are not enough, and there’s a greater tendency to take action now more than ever before.”
“The best organizations are really taking action, supporting their employees, whether it’s with childcare, flexibility in hours or developing diverse talent,” Jatar noted. “And there are opportunities for companies to say we want to be the most diverse and have the best talent and extending their support to Black people.
“And lastly, there’s a push to develop innovation — especially among smaller companies,” he said. “They are innovating product and the supply chain. They are looking through the lens of the future, when people are going to expect more transparency in the supply chain, more justice in the supply chain, when they are going to expect new technologies that address health and sanitation. These companies are innovatingfrom the ground up rather than just fixing legacy systems.”
Roberts asked Allen of EY what kinds of security issues companies and employees were facing during this new period of working remotely.
“We’ve definitely seen a ballooning of threats,” said Allen. “Which is fairly typical when criminals see a fresh opportunity. And it’s coming from organized crime and different state actors. We are all working in a different environment and the biggest weaknesses we’re seeing is employees not being aware of threats.
“One, we have to recognize we are working in a different environment,” Allen continued. “Two, the actors are very sophisticated. They are getting very good at their game. We’re seeing very complicated phishing scams that are exploiting different vulnerabilities — they are selling personal protective equipment, they are offering advice from WHO and doctors, they are exploiting e-commerce.
“Security firms are keeping executives better informed about these risks so they can find the right balance between risk and reward, and can better maneuver in this new environment,” he noted. “But that information about risks needs to be more timely and more in-depth.”
The discussion moved on to the positive lessons learned from the coronavirus crisis.
“There has been an awakening of an awareness of the systemic failures of our economy and our society that were inherent before the COVID crisis,” said Jatar. “A crisis tends to shine a spotlight on your weakest connection, and one of them has been short-termism in the management of culture and gender across all kinds of organizations. There’s been an awakening of appreciation for workers that we didn’t see before.
“And there’s a greater appreciation of the changes that come about by remote working, from improved communications to greater sustainability in work surroundings and a greater appreciation for our human ability to connect online and collaborate,” he said. “Organizations are taking advantage of social distancing and remote working to develop bigger and better ideas and better processes through online collaboration.”
“This crisis has been a gift that has given us an opportunity to accelerate some changes we have wanted to do for a very long time,” said Underhill. “Internally, in the tissue business, SKU management is very important, and one of the things we learned that will be a lasting impact is SKU simplification. In some of our businesses we have cut SKUs by over 70% and that has enabled us to get 15% to 20% improvement in capacity.
“Because the demand was so high, we had no choice but to make some difficult choices,” she said. “And we found that those choices weren’t so bad after all. I see that as sort of a mind-set shift going forward.
“I don’t think any of us would have said we could hold our business together while working from home for over three months,” said Underhill. “But we have. It’s changed the way we connect. I’ve heard people talking about how we’re more engaged, more accessible.”
Roberts asked what transformations we might see in the wake of COVID-19 in terms of consumer behavior, trends and business operations.
“I think we’ll see a more holistic approach,” said Allen. “Rather than looking at risk management as different silos, such as crisis management, information security or business security, we’re seeing a lot of alignment in risk practice to be more coordinated as we move through digitalization.
“One, there’s tremendous overlap in these practices,” he continued. “Two, there are great benefits in getting consistent and timely reporting. And three, we’re really starting to see that these risk assessments need to go deeper into the organization, and some of that is being driven by digitalization. And the demand and speed of digitalization is so significant that the risk practice, whether that’s cyber or IT risk, needs to be provided to business leaders throughout the organization so they can continuously make informed risk-based decisions.”
Roberts: “What changes in consumer behavior are likely to be most impactful and most enduring in the wake of the crisis?”
“We talk a lot about B2C, business-to-consumer, but I think now we are lot more C2B, consumer-to-business, with consumers telling us through their online behaviors and research what values matter to them,” said Jatar. “In this demonetized world, companies have to offer something more than product features and attributes to distinguish themselves. They need to come up with an X-factor that transcends their competitors.
“I’m seeing companies recognizing that consumers and society at large want a lot more out of business than just business,” he said. “They expect businesses to be a part of the community. Organizations that are taking the lead and engaging with Black Lives Matter are also businesses that are creating more equitable feelings for their employees and their customers. There are a couple of value areas where I’m seeing organizations really starting to build a relationship with the B2C and C2B interconnection to really differentiate themselves. But they need to translate those values into action. I think transparency is going to be the big trend going forward because in the digital world there is no place to hide. The companies that take the lead in transparency and build trust will get ahead of their competitors.”
Roberts: “What role does tissue play in a positive human future?”
“All of us are going to become more conscientious, aware and concerned about cleaning and germ control, whether that’s on your person, your automobile, your home or your office,” said Underhill. “I think this is a great opportunity for the tissue world to not only think about our products today, but where we can invent and create innovations that can actually protect at a greater level of confidence.
“I suspect that innovation is going to allow all of us to really gain confidence in protecting ourselves, our family and our environments more than ever before,” she said. “Companies that can invent in this space and create a point of differentiation with real tangible, clinical evidence that you can prevent germs, I think that’s going to be a significant opportunity for the tissue industry.”
Roberts then asked about attracting talent — is that going to be different and is it going to be a bigger challenge in the future?
“The positive thing is rethinking the way we work for the next generation,” said Underhill. “The next generation wants more flexibility, they want to work when they want and where they want, and I believe the former emphasis on visibility in the office, hours in the office — that’s completely reframed by this whole experience, and that’s not important anymore.
“We’re much more focused on the outcomes and how people are working,” she continued. “I’m very excited to see how we carry this forward, and I’m just going to say we’re not going back. We will definitely have much more flexible arrangements for our employee base, particularly our staff operations, in the future. We just have to figure out how to do it. We don’t have the answers yet, but we are definitely not going back to where we were on March 12.”
Tissue World 2020 is currently scheduled for Nov. 11-13, 2020, at the Miami Beach Convention Center.
Registration for North America’s largest gathering of the global tissue trade is still open and can be accessed at https://www.tissueworld.com/miami/en-us. Tissue World attendees typically include suppliers to the tissue industry, tissue converters, integrated tissue product makers, jumbo roll suppliers and retailers and distributors.