The COVID-19 pandemic has upended the dietary supplement supply chain in many ways, including packaging, according to an article in Nutritional Outlook magazine. Primary and secondary packaging materials are in short supply. The problem is creating a lot of stress among manufacturers and forcing them to look for alternate solutions.
“Supply chains are built upon matching supply with demand, and the pandemic drove spikes in demand which no one forecasted. As such, the supply stream has been struggling to keep up,” says Katherine Storer, senior director of supply chain for Berlin Packaging. “The lockdowns brought uncertainty regarding true market needs for certain segments, and April and May were months during which rigid-packaging manufacturers focused much of their capacity on the hand sanitizer market. That created a supply gap for some packaging components used in the natural products industry.”
Packaging types in short supply include “anything related to packaging capsules, such as vitamins,” Storer says, including high-density polyethylene packers and even child-resistant closures.
From the packaging supplier’s perspective, how long could supply be tight? “It depends,” Storer says. “The key challenge is that no one knows how long the pandemic—and its associated change in purchasing behaviors—will last. Some packaging manufacturers began triggering new capital investments to expand capacity shortly after the initial demand surge, and others have been holding off until there’s a better read on the long-term need. Since capital lead times are typically long—and have since also gotten longer due to increased demand—there is a long lag between triggering a new capital investment and increased output for packaging components. In the meantime, there is still a backlog of products which were not forecast, and the market is still in the process of catching up.” As a packaging distributor, she says, Berlin Packaging is working closely with its supply partners and its customers to forecast demand in order to plan how to meet it.
Packaging distributors are also strategizing, Storer says. One solution has been to de-prioritize components less in demand in order to focus on those needing more attention. For what it’s worth, she notes, hand-sanitizer makers are also being forced to look at alternatives. “Hand sanitizer is now being sold in everything from the traditional bottle with a flip-top lid to familiar milk jugs,” Storer says.
Working with a knowledgeable packaging distributor who knows how to solve around problems is also key, says Storer. Packaging distributors, for instance, can help avoid certain price increases and other problems down the line.
“The main recommendation we continue to give to our customers is to partner with the right distributor and consider the total value equation,” Storer says. “In the current situation, not having the packaging to capitalize on opportunities is a big miss for potential growth. The right partner is someone which knows your demand so well that they proactively recommend which package to buy, how much, and when to put it on order to ensure continued supply. Make no mistake, Berlin’s supply chain teams have been putting in long hours to ensure supply for our customers. However, we’ve therefore been able to avoid supply chain disruptions for most customers, even on packaging components where the growth has been 300%-400% of normal needs and which are otherwise sold out for all of 2021. This can only be achieved because we are willing to bet on the success of our customers and truly mean it when we call a supplier a ‘partner,’ even if it means carrying incremental inventory or tailoring programs to their supply needs.”