Covid Pandemic Supply Chain Lessons for Exponential Growth Brands

As Omicron peaks, CPG retail out-of stocks are at an all-time high. IRI calculates them at around 88% of full, which is approximately 7% below normal levels. In Food, the situation is worse, especially in shelf-stable, center store categories, where OOS are hovering around 84% – a historic low.

This storm will pass. But it’s an extreme wake-up call for early-stage brands trying to grow fast. 

Why?

You need to plan farther in advance for success than a slow-growing behemoth riding a 15% surge in baseline sales. 

Doubling unit sales puts you at real risk of production shortfalls (if packaging doesn’t show up), or your co-man runs out of run rate for your ‘cute little’ business (which doesn’t matter much to their annual profits as a plant). 

So, here’s what I recommend you build into your annual planning as a sort of rogue wave protection plan:

• Buy more product than even your intended exponential growth requires, especially in packaging. 
• Always be dating a larger co-man so that you can transition quickly.
• Keep dry powder (i.e., cash) on hand to facilitate over-buying in temporarily constrained environments.
• Foreign manufacturing for fast-growing brands is highly inadvisable due to the slow-twitch nature of global commerce. 
• Do NOT worry about passing on 5-7% inflationary price increases to premium consumers. You have a battle with some retail buyers at the wholesale level, but the consumer doesn’t care. Remember, they’re already paying 50-200% more per unit than they have to in your category. 

  

Good luck with demand planning in 2022! Plan for success!