In this piece for FastGrowthBrands, Colin Darretta, CEO of nutrition business Wellpath, explains discusses the affect the Coronavirus is having on the supply chain of challenger brands. He outlines that while many are struggling to come to terms with this new normal of doing business, others are finding themselves in a unique position of having more demand for their products than ever before.
This past month has been a strange time for retailers as the COVID-19 pandemic continues to make an indelible mark on just about every aspect of what was considered “business as usual.” While many retailers are struggling with a collapse in consumer demand and coming to terms with the new realities of doing business, others are finding themselves in the very fortunate position of having more demand for their products than ever before.
In the wellness sector, we have seen surging demand for immunity-boosting products as consumers do everything they can to stay healthy. And while our company’s immune support products like Boost Elderberry Gummies have increased in popularity, we, like many other businesses, have experienced significant challenges with our supply chain. According to a survey conducted by the Institute For Supply Chain Management, nearly 75% of companies reported supply chain disruptions due to COVID-19-related transportation restrictions, and this figure is only expected to climb.
Significant Strain on Global Supply Chain
The challenges facing the supply chain are multi-layered, impacting everything from sourcing to production to fulfilment. It’s been extremely challenging for retailers to procure the right raw materials for their products given restrictions on exporting and customs being overloaded with demand. Factories worldwide are experiencing full or partial shutdowns and those that make essential goods (e.g., supplying groceries and pharmacies) are only operational at a fraction of their normal scale. Even sometimes overlooked aspects of the supply chain like labels are at risk of getting shut down, which can have devastating impact on manufacturing capabilities. If businesses are fortunate enough to be able to source and manufacture their product, fulfilment can be another major barrier as non-essential centres have closed, and others, like Amazon, have prioritised a small subset of products, leaving consumers sometimes waiting weeks or months to receive their products.
How to Manage Challenges Today and in the Future
Despite the clear challenges of today’s environment, we have learned that they are not insurmountable. Based on our experience navigating the supply chain landscape over the past month, these five tips can make a difference in helping businesses continue to manufacture products and deliver them to customers in a timely manner, not only now, but in the years to come.
Build redundancies to back up every part of your supply chain.
It’s best to operate under the assumption that every single aspect of your supply chain is at risk right now— sourcing, supply chain, fulfilment and distribution. Even if certain parts of your operations aren’t currently feeling a major burn, chances are that won’t last much longer. Many of your suppliers, manufacturers, and fulfilment partners will undoubtedly experience their own issues moving forward, so now is the time to build out redundancies and put full contingency plans in place. By doing so today, you will be able to build a more solid foundation to insulate your business from future threats and propel your business well beyond this current crisis.
Call in favours and be a good partner to others
If your business is in a consumer category that still has demand, your success is still contingent on your ability to make enough product to meet that demand. The strain and stress on the global supply chain is going to make that extremely challenging, but not impossible. Now is the time to rely on your relationships to help navigate the storm. There’s nothing wrong with calling in favours and digging deep into your digital rolodex to leverage existing relationships and forge new partnerships with those hoping to win your business for the long haul. It’s also important to re-evaluate your existing supplier relationships as there will likely be a move to larger, more reputable suppliers who can best support your business needs for the longer term.
Shore up supply for raw materials to secure inventory for future shortages
Procuring enough raw materials to meet your manufacturing and production goals will continue to be an uphill battle. This, combined with overloaded customs processes for imported goods, will likely continue to impede your ability to produce ample inventory. Many businesses have learned that the “just in time” inventory mentality will not hold up in today’s climate, making procurement of materials even more critical. If your business has the capital to commit and the demand for your products is there, consider taking advantage of low interest rates and inventory financing to secure inventory to meet current demand and to protect against future shortages.
Ready yourself for new distribution opportunities
Right now, most businesses are dealing with limited distribution opportunities based on warehouse closures and fulfilment centres like Amazon prioritising distribution of select products. But when the economy eventually rebounds and other channels like retail re-open, businesses that have already put plans in place to leverage these distribution opportunities will be much better positioned for recovery and future growth.
Rethink product mix for future demand
Looking down the line, it makes sense to prioritise the products that have a greater chance of meeting future consumer demand. As many consumers will continue to feel the economic strain of the pandemic, thinking about factors like affordability, relevance and convenience will help you determine where to invest the most time and resources. For example, knowing that immunity and good health will likely remain important to consumers moving forward, WellPath is looking closely at our entire portfolio of nutritional supplements to prioritise the products that help meet consumer desires in those specific areas.
If your business is one of the lucky few to be experiencing continued demand for your products, thinking creatively and strategically about managing your supply chain is mission critical. The reverberations of this pandemic on the global supply chain will be far-reaching, but solidifying operational contingencies now can positively impact the health of your business for years and years to come.