By Mike Montemarano, Associate Editor09.22.20
Euromonitor International recently held a virtual discussion covering approaches to the COVID-19 pandemic and beyond that may prove successful for those in the business-to-business (B2B) space, within and outside of the food, dietary supplement, and agricultural industries.
The international market research and consulting group believes there are broad themes that those in the B2B sector may consider applying to their own operations, in addition to their relationships with supply chain partners and customers, in this changing climate.
Demand-Driven Models Weather the Storm
The pre-COVID global supply chain model has largely been defined by output efficiency. However, threats to weaker links within that supply chain brought about by the pandemic have emphasized just how inflexible these supply chains can be in crises. Becoming overly reliant on low cost for increased output, or upon certain markets, poses risk.
“This could lead to under- and over-supply at all points of the supply chain,” Jonathan York, a consulting manager at Euromonitor, said. “Supply chains are moving toward a much more demand-driven model, as opposed to one dictated by efficiency. Part of that is aggregating even more information on end consumers in order to follow trends and disruptions, which can help reduce waste and costs for warehousing and inventory management.”
In addition to improved visibility of end consumers, Euromonitor suggested having a diverse network of suppliers, with whom a mutual exchange of information occurs, can only serve to benefit all parties involved, including the end consumer—at least in regard to improved shipping information. “Understanding your own business is not enough anymore,” York said. “You need to understand the operations of your suppliers to manage risk.”
D-to-C and E-Commerce Here to Stay
Some of the biggest innovators within food, and other segments, began direct-to-consumer operations, which allowed them to be as responsive to rapidly-changing demands as possible, with one notable example being Beyond Meat.
Beyond that, bolstering e-commerce through relationships with reliable distributors can help circumvent production and transportation disruptions, York said. “These benefits will be long-term, and will continue to be prevalent in the future,” he said. “This isn’t shockingly new information. Technology can also be seen as a way to reduce the number of human touch points.”
Luis Fernando Gripp, executive director at TKS Consult, said companies looking to emerge into the direct-to-consumer channel should, without a doubt, rely on existing e-commerce platforms, where expertise in IT management is much greater.
“If you’re a consumer goods company, it’s very hard right now to get through to retail,” he said. “E-commerce partners have the economic means and the knowledge to help you out. D-to-C is here, and it’s here to stay, but you have to think about how best to make it available with the help of partners.”
Adapting Supplies, Becoming a Provider
During and after this crisis, B2B companies should consider what purposes their raw materials could serve, and what services they can provide beyond merely the provision of raw materials. New product innovations are a key measure that companies can take in order to adapt to quick shifts in consumer demand that occur within a niche of their market segment.
Additionally, suppliers and other B2B companies may consider becoming added-value service providers, beyond just providing raw materials. Providing blockchain technology, transparency, and responsiveness to the shifting regulatory landscape will likely improve any supplier’s value to a client.
“Over-communication doesn’t come naturally across any supply chain, but it allows all partners to respond to changes more efficiently and circumvent similar risks in the future,” York said. “Sharing business plans and strategies gives your partner a better idea of how to assist you.”
“Improving collaboration between business partners is easier said than done,” Gripp said. “The key to success is mainly thinking about a business model where both parties have clear benefits. There can’t be an initiative without shared benefits. We have to have transparency at a level that’s achievable, with goals that are clear for both sides.”
Collaboration has been a longstanding value in the food and ingredients sector, but is even more necessary now, Kamesh Ellajosyula, chief intelligence officer at Olam Ingredients, said.
“I’m a big fan of third party logistics and third party manufacturing,” he said. “In the food industry, using ingredients suppliers gives you some extra tools, and when you have unpredictable supply chain requirements, you have more people you can lean on. Having relationships which are less adversarial and more cooperative benefits everyone, especially when it comes to data.”
The international market research and consulting group believes there are broad themes that those in the B2B sector may consider applying to their own operations, in addition to their relationships with supply chain partners and customers, in this changing climate.
Demand-Driven Models Weather the Storm
The pre-COVID global supply chain model has largely been defined by output efficiency. However, threats to weaker links within that supply chain brought about by the pandemic have emphasized just how inflexible these supply chains can be in crises. Becoming overly reliant on low cost for increased output, or upon certain markets, poses risk.
“This could lead to under- and over-supply at all points of the supply chain,” Jonathan York, a consulting manager at Euromonitor, said. “Supply chains are moving toward a much more demand-driven model, as opposed to one dictated by efficiency. Part of that is aggregating even more information on end consumers in order to follow trends and disruptions, which can help reduce waste and costs for warehousing and inventory management.”
In addition to improved visibility of end consumers, Euromonitor suggested having a diverse network of suppliers, with whom a mutual exchange of information occurs, can only serve to benefit all parties involved, including the end consumer—at least in regard to improved shipping information. “Understanding your own business is not enough anymore,” York said. “You need to understand the operations of your suppliers to manage risk.”
D-to-C and E-Commerce Here to Stay
Some of the biggest innovators within food, and other segments, began direct-to-consumer operations, which allowed them to be as responsive to rapidly-changing demands as possible, with one notable example being Beyond Meat.
Beyond that, bolstering e-commerce through relationships with reliable distributors can help circumvent production and transportation disruptions, York said. “These benefits will be long-term, and will continue to be prevalent in the future,” he said. “This isn’t shockingly new information. Technology can also be seen as a way to reduce the number of human touch points.”
Luis Fernando Gripp, executive director at TKS Consult, said companies looking to emerge into the direct-to-consumer channel should, without a doubt, rely on existing e-commerce platforms, where expertise in IT management is much greater.
“If you’re a consumer goods company, it’s very hard right now to get through to retail,” he said. “E-commerce partners have the economic means and the knowledge to help you out. D-to-C is here, and it’s here to stay, but you have to think about how best to make it available with the help of partners.”
Adapting Supplies, Becoming a Provider
During and after this crisis, B2B companies should consider what purposes their raw materials could serve, and what services they can provide beyond merely the provision of raw materials. New product innovations are a key measure that companies can take in order to adapt to quick shifts in consumer demand that occur within a niche of their market segment.
Additionally, suppliers and other B2B companies may consider becoming added-value service providers, beyond just providing raw materials. Providing blockchain technology, transparency, and responsiveness to the shifting regulatory landscape will likely improve any supplier’s value to a client.
“Over-communication doesn’t come naturally across any supply chain, but it allows all partners to respond to changes more efficiently and circumvent similar risks in the future,” York said. “Sharing business plans and strategies gives your partner a better idea of how to assist you.”
“Improving collaboration between business partners is easier said than done,” Gripp said. “The key to success is mainly thinking about a business model where both parties have clear benefits. There can’t be an initiative without shared benefits. We have to have transparency at a level that’s achievable, with goals that are clear for both sides.”
Collaboration has been a longstanding value in the food and ingredients sector, but is even more necessary now, Kamesh Ellajosyula, chief intelligence officer at Olam Ingredients, said.
“I’m a big fan of third party logistics and third party manufacturing,” he said. “In the food industry, using ingredients suppliers gives you some extra tools, and when you have unpredictable supply chain requirements, you have more people you can lean on. Having relationships which are less adversarial and more cooperative benefits everyone, especially when it comes to data.”
