Strategic supply chain management is a critical part of any health, wellness, or beauty business. We are living in era with a great deal of uncertainty, which can make it harder than ever for supply chain teams to simply operate efficiently, let alone create new competitive advantages. To help with planning, we’ve outlined 6 distribution challenges health and beauty organizations are facing. By understanding these challenges, supply chain leaders can make informed decisions when developing a more resilient, strategic future.
1) Empowered Consumers:
It’s hard to remember a time when consumers were content to allow 4-6 weeks for delivery. Today’s consumers want their health and beauty goods in hours or days, not weeks. They also demand real-time information, transparent processes, simple transactions, and quick delivery on their terms.
Lead times are shrinking, and pressures around speed-to-market are growing. Even upstream suppliers feel the pressure as their customers set new performance standards. After all, those intermediate buyers are also consumers and bring their heightened expectations to work. As these demands place pressure on order fulfillment and inventory management in the supply chain, there is, of course, growing concern about the added cost of adopting new, customer-centric business models. A primary goal for strategic supply chain leaders is finding this balance between customers’ changing expectations and the ongoing pressures on efficiency and cost.
2) Market and Social Volatility Distribution Challenges:
Market and social uncertainty cause major disruptions across healthcare supply chains. Trade uncertainties and disruptions have dominated the global marketplace, directly affecting national and international supply chains. From trade wars to tariff disputes to Brexit and the COVID pandemic, cross-border and economic uncertainty is becoming our new norm. Add to this the impact of rolling and recurring economic shutdowns that made key supplies of raw materials and parts unavailable for weeks or months, and stifled production and distribution across the globe. This uncertainty has caused supply chain leaders to shift their priorities away from efficiency with a new focus on resilience.
The supply chain has never been more complex. Today, health, wellness, and beauty supply chain managers wrestle with an increasing number of suppliers, partners, and customers, many on a global scale. Empowered consumers only add to this complexity as organizations support the “mass personalization” of products and a growing demand for DTC business models. In fact, delivery has become a part of the very product being offered, with 87% of online shoppers citing free shipping as a top reason to choose a specific merchant. More than half of Canadian online shoppers look for managed expectations around delivery and almost as many choose their supplier because they offer faster shipping. All of this requires sophisticated, intelligent supply chains.
Health and wellness suppliers looking to localize their operations in Canada also must understand the distribution challenge of complying with Health Canada rules and regulations.
4) Talent Shortages:
One of the biggest challenges facing the industry in the coming decade will be the continued shortage of people, especially in transportation, where replacements for retiring drivers can’t be found quickly enough. During the pandemic many truck drivers retired, or changed careers, leaving an 9% vacancy rate for jobs in the trucking industry. In general, many people’s work priorities changed, with some opting for more flexible work-from-home jobs, creating a challenge for warehouses and supply chains.
Overall, the industry is struggling to find employees with the right skills and experience and contending with a general lack of training on next-generation supply chain thinking. Organizations at every stage in the supply chain need solid strategies to manage through these labour shortages.
5) Analytics Expertise:
Good decisions require solid metrics. Providing the end-to-end insights needed to meet today’s demands is nearly impossible without the transparency and solid metrics gained through strong analytics.
When supply chain planning happens in silos, using limiting technology, it creates time-consuming handoffs that make it almost impossible to keep up with today’s complexity and
empowered consumers. Many strategic supply chain leaders are now looking to their 3PL partners to help them past this frustrating situation by providing the digital maturity they need to find and keep their competitive edge.
6) Digital Maturity:
Technology is driving productivity, efficiency and customer services. Digital transformation can help supply chain planning, improve processes, collaboration, and customer satisfaction by consolidating data and providing analytics capabilities. A digitally mature supply chain can break down the silos that slow progress and innovation and help drive new disruptive approaches.
Organizations that invest in digital transformation quickly shift from that reactive stance to a proactive way of working, using evidence-based decision-making across the supply chain.
Solving Your Distribution Challenges:
These changes are forcing healthcare brands to rethink how they get their products to consumers, while creating new opportunities for direct to consumer channels. However, this ultimately brings a whole new set of distribution challenges health, wellness, and beauty supply chain leaders must understand and manage.