Supply Chain Pressures in a Pandemic

October 28, 2020

Supply Chain Pressures in a Pandemic

The past several months have indicated how fragile our supply chains are. No matter where you are in the world, you’ve likely experienced disruption and pain, in both personal and professional life, related to the forces of supply and demand. Some of the recent pain has been caused by huge changes in demand, pressure on logistics and infrastructure, changing emotions and has even been impacted by rules, regulations and restrictions. In some supply chains, returns to normal might be years away as demand has exceeded supply by magnitudes. We’ve seen examples where poor crop management has exacerbated the crisis. In the ingredient space, predictably this demand/supply gap has given rise to increased economic adulteration, which on the positive side, has created new opportunities for suppliers and brands to truly show they value long-standing relationships and are maintaining customer trust by providing stable and reliable, quality supply through these times.

This pandemic has also shed new light on the supply chain itself. It has illustrated that we are globally reliant on both ingredients as well as packaging supplies. This fact has been a somewhat unpleasant truth for the supplement industry, for years.  This industry relies heavily on imported materials, largely from Asia, especially China. The disconnect in this is that most consumers don’t realize this fact, mistakenly believing that ingredients are primarily grown and sourced locally. The pandemic has triggered a new awareness leading to new transparency with companies unable to hide the disruptions caused by long supply chains. Just-in-time solutions and limited inventory at the outset increased this vulnerability with many companies never catching up and having to creatively explain shortages to an irate and inconvenienced customer base.

Companies have responded in a few different ways over recent months. Some have repatriated supply chains, others have increased inventory levels or built-in new redundancy.

The sourcing issue though has now become both political and nationalistic, here in the US, as well as elsewhere. Buying nationally has become a new rallying cry, set against a backdrop of anti-China sentiment.

Companies are scrambling to localize where possible, and supply chain transparency has new momentum and value. This ‘act locally’ mindfulness has been leapt upon by companies of all sizes as our worlds have shrunk and early feedback suggests this message is resonating with both consumers and business partners.

Now, let’s deep dive into a few things happening on the macro and geopolitical scene.

Nationalistic sense and fervor have never been higher. As borders closed to travel, and international logistics became problematic, shorter supply chains benefited. At the same time, trade wars and rising tariff tensions have also benefited more predictable, local chains. Around the world, we have seen a massive repatriation movement – a pragmatic reality. In the United States, anti-China sentiment has exposed the vulnerability of many business segments, and the supplement and health ingredient space is exceptionally vulnerable. The term ‘Buy USA’ has become both a practical and emotional rallying cry over recent years, and the past few months has escalated both sentiment and actual behavior.

Whilst there is less direct ‘anti-China’ rhetoric in the consumer sphere in Europe, the trend for consumers looking to buy closer to home holds true, with distrust of large international supply chains still strong. While a distant memory for some, the 2013 horsemeat scandal was certainly a significant catalyst for growing consumer distrust in complex supply chains in Europe. Such distrust in international supply chains, coupled with a growing sense of nationalism in many European countries (Brexit and the rise of nationalism in France, Germany, and Italy are prime examples) has led to a strong ‘buy local’ narrative. The UK in particular has seen strong messaging from industry and farmers unions to ‘Buy British’ and TV ads urging shoppers to “trust the tractor”.   

FTC action
Coming back to the US, the topic of Country of Origin made new headlines several weeks ago in the US when the Federal Trade Commission (FTC) proposed to use its largely unused authority against unlawful ‘Made in the US’ claims, specifically prohibiting these claims unless (1) Final assembly or processing of the product occurs in the United States, (2) all significant processing that goes into the product occurs in the United States, and (3) all or virtually all ingredients or components of the product are made and sourced in the United States. The comment period for this guidance closed on September 14, 2020. The impact of this change of use of authority could have a considerable impact on the dietary supplements industry for the reasons cited above – many supplement ingredients are sourced abroad (often China) and there is a transparency disconnect since most consumers don’t know this. To be clear, this FTC guidance was not new rule-making, but was intended to codify existing standards. Experts have challenged that this guidance oversteps FTC’s authority which means there may be court challenges in the new future should enforcement change. Stay tuned.

Tensions with Hong Kong specifically changed trade practice with the Customs and Border Patrol (CBP) ruling that all goods produced in Hong Kong would now be required to be labeled as made in China and lose trade protections.

ECJ ruling
Meanwhile, a recent ruling by the European Court of Justice (ECJ) means that national measures requiring mandatory labeling of origin and provenance for foodstuff are allowed under the EU law … but need to be justified. Europe’s highest court stated that the EU’s harmonized framework for food labeling “does not preclude member states from adopting measures providing for additional mandatory particulars regarding the origin or provenance.”

However, the ECJ said such national measures need to be justified on one or several grounds, including the protection of public health and prevention of food fraud, adding that adoption of mandatory origin labeling is possible only if there is a “proven link between certain qualities of the food concerned and their origin of provenance.”

It is interesting that these occurrences should intersect and as one who doesn’t believe in coincidence, I’d suggest a broader movement is at play.

Buying local, regional, and national certainly makes increasing supply chain and value-based sense. But in a world of COVID, Brexit, and increasing US-China ‘trade wars’ it is a shrewd geopolitical move too.

~ Len Monheit, CEO, Trust Transparency Center

richard151
Author: richard151

Unlock the Power of Transparency: Schedule a Meeting Now

Ready to Illuminate Your Path?
Partner with Trust Transparency Today.

Get inTouch

Lori Diez

Lori Diez combines compassion and excellence to lead organizations to their next level. A small-town Texas childhood taught her the value of hard work and relationships, which she uses to foster teamwork that brings results that have transformed cultures and programs to their highest potential. Her successful career in pharmaceutical and nutraceutical sales leadership and event hosting has prepared her to deliver results as the COO of TrustTransparency, where she uses her industry knowledge to ensure that the company’s operations run smoothly as they support nutraceutical companies in their mission to help others. Lori’s passion for charity reflects her belief that individuals working together can change the world, no matter how small their contribution to the effort. This year, she looks forward to continuing over a decade of service at the Houston Livestock Show And Rodeo, where she will be the Chairman of the Livestock Committee.

Conference Handouts

Conference Handouts

CoQ10 Statin Associated Myaglia Meta Study Barry Tan 0618 Case Study

CoQ10 Statin Associated Myaglia Meta Study Barry Tan 0618 (1)

Statin Q10 Effect Case Study

Statin Q10 Effect Case Study

Schedule Consultation with Trust Transparency

Glynnda Steinford

Glynnda Steinford, Trust Transparency Consulting’s Director of Customer Relations, brings over four decades of healthcare experience to her vital role in client engagement and relationship building. Her diverse background spans from administering medical groups to impactful stints in pharmaceutical and nutraceutical sales, all underlined by her degree in Healthcare Administration.

At the heart of Glynnda’s work is her talent for nurturing long-term connections, a skill she leverages to enhance client experiences and partnerships within the consultancy. Beyond her professional commitments, she enjoys life’s simple pleasures, whether it’s her love for cats and cooking or her ventures into golf, always prioritizing cherished moments with family and friends. Her personal interests echo the dedication and warmth she extends in her professional network, making her an invaluable asset to the team.

Caiti Dowden

Caiti Dowden stands as a crucial pillar at Trust Transparency Consulting, bringing invaluable insight and expertise to her role as Senior Executive Assistant’ since her start in 2018. With an academic background from Sam Houston University and a career shift from education to the nutraceutical sphere in 2010, Caiti has cultivated a sharp acumen for dissecting industry trends and bolstering strategic decision-making.

Her transition from Data Analyst reflects her growth and deep understanding of the business landscape. Caiti’s commitment goes beyond professional excellence; she thrives on balance, drawing from her rich life outside of work to enhance her organizational contributions. Whether it’s family time, volunteering, or rooting for Houston’s sports teams, she believes in embracing experiences to fuel her professional creativity and insight.

In her current role, Caiti’s dedication to dynamic business analysis and operational support proves her to be an irreplaceable asset to our team, embodying the synergy of personal enrichment and professional success.

Pam Hilpert

Pam Hilpert, Chief of Staff at Trust Transparency Consulting, has been instrumental in the firm since its inception, leveraging her 17 years of accounting experience, including a significant tenure in the nutrition sector. Her collaboration with Scott Steinford spans various successful ventures, emphasizing her integral role in the company’s financial and strategic initiatives.

An alumnus of Sam Houston State University, Pam holds degrees in both Business Administration and Accounting, as well as an MBA, adding academic heft to her practical industry insights. Beyond her professional prowess, Pam is passionate about family, enjoys live music, delves into quilting, and volunteers at her church, reflecting her well-rounded life.

Her multifaceted expertise and longstanding dedication make Pam a cornerstone of Trust Transparency Consulting’s operational strength and team unity.

Scott Steinford

Scott Steinford, a trailblazer in strategic leadership, boasts a certified M&A background, having navigated companies from their genesis to industry prominence. His brainchild, Trust Transparency Consulting, born in 2007, stands as a testament to his dedication to ethical business practices and strategic foresight, offering industry stakeholders invaluable guidance.

Beyond founding and steering companies, Scott has enriched the business landscape with his insightful keynotes and prolific written contributions, emphasizing his commitment to elevating industry standards. His executive tenure shines in roles as CEO or President of for-profits like ZMC-USA and Doctor’s Best, extending to significant contributions in non-profit sectors.

Notably, Scott’s influence is a driving force in the CoQ10 market, where his leadership has significantly bolstered the ingredient’s global presence. His roles in various capacities, including as a New Hope Ambassador, keep the community informed, providing in-depth industry reports and insights.

An active advocate within professional associations and an Editorial Advisor for leading industry publications, Scott’s expertise is both recognized and sought after. With academic roots in Pre-Law and a Master’s in Law, his journey transcends textbooks, embodying real-world business acumen and transformative leadership.

Scott Steinford merges visionary entrepreneurship with principled leadership, creating a legacy of innovation, growth, and unwavering commitment to industry excellence.