Supply Chain Problems in the Nutraceuticals and Dietary Supplements Industry
The situation of nutraceutical businesses during the past two years may be best described as unpleasant.
Nutraceuticals and dietary product supply chains have been severely strained due to the skyrocketing demand caused by the COVID-19 pandemic; border closures, geopolitical conflicts, and the continued threat of climate change has continually affected the supply chain.
Producers are not the only ones having a hard time. Concerned about the pandemic’s uncertainty, consumers are prioritizing elements like immunity and respiratory health with a more comprehensive approach to well-being, including mental and physical health.
As a result, customers are actively exploring solutions that fit their specific health goals, pushing up the demand for nutraceuticals and dietary supplements even more.
As the nutraceuticals industry faces increasing demand and a new wave of supply chain issues, let us look at how recent events have impacted the global supply chain and why developing resilience should be a top priority in the near future.
COVID-19 Assists in the Identification of Gaps in the Network
The powerful economic shockwaves caused by the COVID-19 outbreak exposed fundamental problems in the global supply chain. Most organizations, from retail to pharmaceuticals, have depended on the “just-in-time” business strategy for decades.
To maximize return on investment, the supply chain prioritizes predictable processes, single-supplier sourcing, close coordination, and low levels of inventory.
This tricky balance act was thrown into turmoil in the initial months of 2020. The consistent flow of cargo ships ceased, first from China and subsequently from nearly every other region.
With millions of individuals stranded at houses and authorities scrambling to stockpile testing kits, face masks, and personal safety equipment, the demand for delivered products was at a record-breaking high – despite the fact that global trade capacity had plummeted.
Organizations in the nutraceutical industry were mainly allowed to continue manufacturing throughout the pandemic due to their status as “essential” suppliers. Although this protected the industry from the terrible losses seen in other areas, the need for consistency meant that brands had to manage the turbulent conditions that affected the shipping and logistic markets.
Increasing the Pressure
As the global distribution system was adapting to the post-COVID scenario, severe geopolitical crises arose, putting further strain on already overstressed supply chains.
Russia’s invasion of Ukraine is the perfect example of this situation. Wheat products took the brunt of the damage, but Ukraine is also the world’s leading supplier of sunflower oil, a critical commodity extensively utilized in processed goods as a healthier alternative to standard oils.
The violence has had an impact not just on this year’s harvest but also on planting for next year, implying that there will be long-term consequences.
Less well reported but more relevant from the standpoint of the nutraceutical sector is the effect on botanical substances such as Rhodiola (Rhodiola Rosea) and Eleuthero (Eleutherococcus Senticosus). This demonstrates the broad impact that localized difficulties can have, affecting not only the current ingredient manufacturing cycle but also the sustainability of the supply chain for months.
A similar story can be told about many other raw materials used in nutraceutical products, such as turmeric and black turmeric, whose cultivation in India has been dramatically affected by recent droughts, floods, and hurricanes. Erratic availability of natural raw materials enhances the likelihood of adulteration.
When stocks run short, unscrupulous providers will bulk buy their active components to fill orders or may swap them with other compounds. Synthetic sources may be mislabeled as all-natural components, which is especially problematic in the turmeric supply chain.
Rigorous “product and batch” testing, supplier audits, and an industry-wide commitment to increasing supply chain transparency are thus critical to guarantee a sustainable supply of authentic ingredients and customer safety.
The pandemic, a volatile geopolitical environment, and climate change have all highlighted the need for better supply chain resilience — but have also paved the way for true supply chain process transformation. Anticipating and limiting the impact of potential vulnerabilities is a vital first step in developing a more resilient sourcing strategy.
Businesses in the nutraceutical industry, such as Jeeva Organic, are proactively engaging in sustainability measures throughout the supply chain to future-proof their raw material sources, such as elderberry extract, omega-3 fish oil and black turmeric.
Adapting new tactics, such as supply localization or increased storage capacity, can relieve pressure during unforeseen events.
Finally, the essential step that brands can undertake to strengthen their resistance to market volatility is establishing a supplier network. Even before the epidemic, brands recognized the inherent risk of depending on a single sourcing partner, primarily when that supplier is headquartered overseas.
A multi-supplier approach is not without risks, as organizations who rely on global contract manufacturers and the logistics associated with them were discovered when the COVID-19 infection became a pandemic.
However, the benefits of establishing a diverse network of long-standing and newly developed partners significantly outweigh the possible risks.
Harnessing the combined force of numerous partners is quickly becoming the most effective option for nutraceutical makers, from boosting customer trust with greater traceability to specialized sustainability initiatives or finding novel solutions to growing difficulties.
Coming Back Stronger
Brands are naturally ready to move on from the pandemic’s uncertainty, but the supply chain weaknesses it exposed cannot be ignored lightly. The current Ukrainian conflict and the imminent threat of climate change are already putting systems to the test.
According to Statista, the global dietary supplement market is expected to produce over 308 billion US dollars by 2028.
Companies are not helpless to lessen the effects of these or other upcoming difficulties because of their experiences over the last two years. They will be far more resilient to upcoming supply chain disruptions and be able to provide stronger bottom-line results by measuring their operations against the actions in this action plan.
Nutraceutical Businesses can ensure they are prepared to meet the demand, regardless of the pressures that the future may bring. By carefully examining their current sourcing infrastructure, looking into the reliability, openness, and capacity of potential suppliers, these businesses are developing a robust network of reliable suppliers.