Daniela Ciocan, Founder, Unfiltered Experience03.05.20
Here, Daniella Ciocan speaks with industry experts about managing the supply chain in light of a global epidemic [ED NOTE: According to the World Health Organization's (WHO) description of pandemic phases, coronavirus is only a step away from being a pandemic.]
Taking into consideration the Chinese New Year coupled with the increasing spread of the coronavirus, this is likely the most disruptive time the beauty industry has experienced in more than a decade. And the bad news is that this is potentially just the tip of the iceberg and problems may have only just begun.
On a good day in the beauty industry, launching brands and managing global supply chains is far from easy. Even in the absence of a global epidemic, on-time product releases, well-stocked store shelves, and skyrocketing sales require a solid foundational strategy and careful planning with trusted partners.
Then, there are times when external factors threaten to disrupt the supply chain.
I have had conversations around the impact of the coronavirus with several industry members and had lots of great insights from online retailer Jennifer Coy of Beauty Care Choices and Brian Hollowaty, Inspired Brands, who spent the bulk of his career in and out of China.
Hollowaty fields countless emails daily from brands and large national retail buyers seeking U.S.-based packaging options following an indefinite shutdown of their Chinese supplier—“At this point,” says Hollowaty, “It isn’t a matter of ‘will this affect my global supply chain?’ - it’s a matter of when.”
In addition to supply and quality control concerns, brands are increasingly fearful of opening packages from China, due to concerns about possible germ contamination. Companies may also feel hesitant about wiring money to Chinese manufacturers, with no clear timeline for obtaining product samples.
As with past epidemics, things will likely get worse before they get better...
… which means that smart brands need to get a contingency plan in place right now.
It all sounds a bit drastic, until you take a look at the facts:
- Due to the difficulty of diagnosing coronavirus in its early, latent stage, the illness is spreading more rapidly than first anticipated.
- Much of China - manufacturers included - is currently experiencing a full government-mandated shutdown, says Hollowaty.
- At this time, there is no definitive end in sight.
“China is an incredibly vital part of the global supply chain,” Hollowaty explains. “Even if (beauty) products are made in the US, it’s not uncommon for packaging components or even raw materials to be sourced in China. Any disruption or delay in any of these items causes a ripple effect in the supply chain.”
To make matters worse, contract manufacturers typically will not start production until all items on the bill of materials are in stock.
Here, are 5 key ways that Hollowaty recommends to protect your brand from global supply chain disruptions:
- Take the time to dual- or triple-source every manufacturing partner - even those located here in the U.S. - so a production glitch will not slow you down.
- Place orders for back-up stock to ensure a steady supply.
- Leverage blanket purchase orders to ensure you always have stock on-hand.
- Continuously seek and qualify new global vendors.
- Treat your vendors as partners, communicating with them regularly and often to discuss challenges and find creative solutions.
Now more than ever, it is crucial for brands to get creative and resourceful in solving supply chain issues before they arise. Even in the wake of a worldwide coronavirus outbreak, forward-thinking companies can thrive with a bit of ingenuity and pre-planning.
If there’s one thing that coronavirus is teaching us, it’s that contingency plans are a MUST! If you haven’t already, start having these conversations now.
Photos: Daniela Ciocan; a screenshot from this Coronavirus tracker.
