By Gene Bruno, MS, MHS, RH(AHG), Vice President of Scientific & Regulatory Affairs, NutraScience Labs07.18.22
If you’re a dietary supplement brand owner, you are no doubt familiar with supply chain delays and issues associated with contract manufacturing. About a year ago, the following statement was issued via a White House blog, “These shortages and supply chain disruptions are significant and widespread—but are likely to be transitory.”
In fact, for almost two years various industry experts have predicted that this volatility would continue for another year or so. Yet here we are in the third quarter of 2022, and supply chain issues are still problematic.
Lost revenue is one obvious consequence of out-of-stocks, but the worst consequence is losing a customer and their trust. And that concern is not limited to retailers; it includes brand owners as well. The fact is that 37% of consumers who experience a stockout will shop with another brand, and 9% will not buy anything; only 17% will return to purchase the item later when it’s back in stock. These are not promising statistics.
Hasn’t there been enough time for these issues to resolve? Though that would be nice, the answer appears to be no. As the pandemic continues, the delays also continue to affect the supply chain worldwide, which may well be the greatest threat to company growth and countries’ economies.
There are continual reports of choked ports, record freight rates, out-of-place shipping containers, and other issues causing disruption. Specific to the dietary supplement industry, a survey of dietary supplement brand owners conducted by NutraScience Labs (a contract manufacturer of dietary supplements) found that nine out of 10 brand owners indicated they’re currently experiencing a disruption in their supply chain.
Naturally, these solutions are beyond the means of most companies in the dietary supplement industry. Nevertheless, steps can still be taken in overcoming shipping delays. Of greatest importance for dietary supplement brand owners is to take a detailed approach when it comes to demand planning. Develop a 12-month demand plan for each SKU—and it’s better to overestimate than underestimate needs.
It is also important that brand owners work closely with their manufacturer. This means they need to provide their demand plan as far in advance as possible. Regarding purchase orders, they also need to give the manufacturer plenty of advance notice for purchasing raw materials and componentry. It is even advisable to place blanket purchase orders to help assure consistency and avoid out-of-stocks due to supply chain issues. Even if you’re not a big company, you can take these steps, thereby placing your company in a better position than your competitors.
About the Author: Gene Bruno, MS, MHS, RH(AHG) has 42 years of dietary supplement industry experience. With a master’s degree in nutrition and a second master’s degree in herbal medicine, he has a proven track record of formulating innovative, evidence-based dietary supplements. Bruno currently serves as both the Vice President of Scientific and Regulatory Affairs at NutraScience Labs and Professor of Nutraceutical Science at Huntington University of Health Sciences where he’s taught doctors, nurses, and pharmacists about integrative healthcare. He also writes extensively on nutrition, health, and nutraceuticals and has formulated hundreds of evidence-based dietary supplements, including fitness, health, and wellness products. For more information: www.nutrasciencelabs.com.
In fact, for almost two years various industry experts have predicted that this volatility would continue for another year or so. Yet here we are in the third quarter of 2022, and supply chain issues are still problematic.
Ramifications of Supply Chain Issues
As a supplement brand owner, the worst potential outcome of supply chain issues is going out-of-stock on your key SKUs. According to one report, “51% of retail and e-commerce executives cited out of stocks as the biggest challenge driven by the pandemic.”Lost revenue is one obvious consequence of out-of-stocks, but the worst consequence is losing a customer and their trust. And that concern is not limited to retailers; it includes brand owners as well. The fact is that 37% of consumers who experience a stockout will shop with another brand, and 9% will not buy anything; only 17% will return to purchase the item later when it’s back in stock. These are not promising statistics.
Further Reading: 2022 Contract Manufacturing Survey: Our fifth annual audience survey reveals great value in, and reliance on, contract manufacturing partners.
Like the Energizer Bunny…
Unfortunately, supply chain issues keep going and going, and there’s no apparent sign of letting up. But, why is this the case? The answer depends upon who you’re listening to. The best explanation I’ve come across is that a significant amount of the world’s manufacturing capacity is based in Asian countries (some European countries as well), and those countries were all hit hard by COVID-19. This caused many factories to shut down, or at the very least reduce their production. Naturally, this has had a ripple effect, resulting in the continuance of supply chain disruptions.Hasn’t there been enough time for these issues to resolve? Though that would be nice, the answer appears to be no. As the pandemic continues, the delays also continue to affect the supply chain worldwide, which may well be the greatest threat to company growth and countries’ economies.
There are continual reports of choked ports, record freight rates, out-of-place shipping containers, and other issues causing disruption. Specific to the dietary supplement industry, a survey of dietary supplement brand owners conducted by NutraScience Labs (a contract manufacturer of dietary supplements) found that nine out of 10 brand owners indicated they’re currently experiencing a disruption in their supply chain.
Is There Light at the End of the Tunnel?
This is a good question. Certainly, the answer is yes, but the question of when is elusive. Thus far, experts in our industry (or any other industry for that matter) have been unable to answer that question. New SARS-CoV-2 variants and issues related to COVID-19 have made seemingly reasonable predictions, unreliable. However, we can take steps to mitigate the problems associated with supply chain delays.Mitigating Supply Chain Associated Problems
Larger companies have been buying their own warehouses to solve storage problems. Likewise, some shippers are making their own containers when they can’t find any. There have even been cases of some companies chartering vessels when bookings aren’t available with standard ocean carriers.Naturally, these solutions are beyond the means of most companies in the dietary supplement industry. Nevertheless, steps can still be taken in overcoming shipping delays. Of greatest importance for dietary supplement brand owners is to take a detailed approach when it comes to demand planning. Develop a 12-month demand plan for each SKU—and it’s better to overestimate than underestimate needs.
It is also important that brand owners work closely with their manufacturer. This means they need to provide their demand plan as far in advance as possible. Regarding purchase orders, they also need to give the manufacturer plenty of advance notice for purchasing raw materials and componentry. It is even advisable to place blanket purchase orders to help assure consistency and avoid out-of-stocks due to supply chain issues. Even if you’re not a big company, you can take these steps, thereby placing your company in a better position than your competitors.
Conclusion
Supply chain issues exist and don’t show immediate signs of letting up any time soon. While these issues can have a negative impact on the business of dietary supplement brand owners, there are steps that can be taken to help mitigate the impact. This includes better demand planning and providing contract manufacturers with plenty of advance notice to allow for the purchase of raw materials and componentry.About the Author: Gene Bruno, MS, MHS, RH(AHG) has 42 years of dietary supplement industry experience. With a master’s degree in nutrition and a second master’s degree in herbal medicine, he has a proven track record of formulating innovative, evidence-based dietary supplements. Bruno currently serves as both the Vice President of Scientific and Regulatory Affairs at NutraScience Labs and Professor of Nutraceutical Science at Huntington University of Health Sciences where he’s taught doctors, nurses, and pharmacists about integrative healthcare. He also writes extensively on nutrition, health, and nutraceuticals and has formulated hundreds of evidence-based dietary supplements, including fitness, health, and wellness products. For more information: www.nutrasciencelabs.com.
