Never mind spiffy watches, now Eggo frozen waffles are on allocation (Leggo your Eggo: There’s a waffle shortage, CNNMoney Nov 18). Kellogg apparently makes Eggos in two bakeries. The one in Atlanta was damaged by flooding. The one in Tennessee is having a bunch of equipment replaced. The result? Limited waffles until mid-2010.
In the interim ‘Remaining inventory will be rationed to stores across the country “based on historical percentage of business.”‘ One interpretation of that may be “try Wal-Mart” if you are jonesing for waffles. But this also brings up how allocations schemes can affect supply chain decisions. I suspect that most grocery store managers were rather surprised that Kellogg could run out of Eggos. Had they known, they would likely have tried to boost sales. That is, allocation schemes that dole out tight supply based on past sales give downstream firms an incentive to move product. That potentially increases sales when supplies would not otherwise be tight. It may be stretch in the case of frozen waffles but it is certainly something that happens in the auto industry when firms use turn-and-earn allocation.