Effectively managing an organization’s supply chain requires having the right resources, partners and planning tools to mitigate risk and navigate the challenges and disruptions that can occur in a constantly fluctuating global network of suppliers, contract manufacturers, brands and other key stakeholders working to meet the dynamic flow of consumer product demands.
As we survey the current U.S. nutritional supplement supply landscape, we have primarily seen consistency and stability in terms of pricing and supply for the early part of 2025. Looking ahead to the second half of the year, the industry is keeping a close eye on macro-economic drivers, including potential impact from evolving U.S. tariffs on imports from China, Canada and Mexico, with China being a particularly significant source of certain raw materials, ingredients and packaging components.
As the nutritional supplement industry continues to evaluate macro-economic outlook, including possible tariff implications, there are planning strategies that contract manufacturers and brands can consider to help better prepare for any related challenges that may arise.
Supply Chain Management Best Practices and Planning Strategies
• Diversifying Raw Materials Sourcing: A highly recommended practice for brands and manufacturers who rely significantly on raw materials from particular geographies, is to evaluate material availability and identify alternate sourcing strategies from diversified regions, where possible. In addition to China, other geographies that offer sourcing options of raw materials for the nutrition industry, include Southeast Asia, Europe and the U.S., for example. Identifying cost-effective alternative options will enable businesses to be better positioned to shift sourcing to other geographies when needed, to mitigate risk of production delays and pricing issues when supply constraints and other supply chain issues may arise for particular materials and packaging components.
• Strategic Purchasing and Inventory Management: From suppliers to brands and manufacturers up and down the chain, making strategic purchases of ingredients and materials that are vital to production and potentially subject to pricing volatility is another valuable approach to consider to help mitigate risks during future supply chain disruptions. This practice can allow businesses to create a safety stock for use at a later date in the event of increased pricing or supply shortages. It’s important to note that employing these strategies are subject to economic feasibility and organizations need to evaluate their individual working capital scenarios and cost benefits, as well as warehouse space availability to determine if it makes sense for their business.
• Reformulation Options: Another useful contingency planning strategy for supplement brands to consider to better prepare for pricing and supply issues that may impact particular products is to identify potential reformulation options. This would entail looking at alternate cost-effective ingredients and raw materials in categories subject to pricing risks that could be used in formulating their products without reducing quality, integrity or effectiveness. Being mindful of alternative formulation options in advance can provide brands with an additional layer of support in mitigating risk when facing any pricing and supply chain challenges that may occur down the road.
• Partnership and Collaboration: Working and collaborating with the right partners is always a critical best practice in effective nutrition industry supply chain management. Brands should ensure they are working with contract manufacturers and other partners who possess the adequate processes and technologies required to mitigate risks and can help guide them through the ever-changing landscape. From our view as a contract manufacturer, it’s critical that we have transparent communication and collaborative relationships with both the brands we serve and our strategic partners who provide us with raw material and packaging components. Having a strong network of strategic relationships can help provide better visibility of requirements needed to help with planning and forecasting which can mitigate potential inventory risk and exposure on the back end. These relationships can also include collaborating with supply chain partners to share extra costs, working capital burden or warehousing space as needed.
In order for the nutritional supplement industry to navigate any potential disruptions in supply chain from tariffs or other drivers, staying informed and updated on anticipated areas of impact, and ensuring that key players have the appropriate people, processes and contingency plans to address any arising challenges will be important.NIE
Thomas Luna has 20-plus years of end-to-end operations and supply chain experience within various industries including consumer packaged goods (PepsiCo & Dr Pepper Snapple Group), pharmaceuticals (Nestle Skin Health), and management consulting (The Hackett Group). In his current role as chief operations officer of Lief Labs, Luna has executive leadership responsibilities across manufacturing, engineering, technical operations, IT, sourcing/procurement, planning, customer operations and logistics. For inquiries or collaborations, Luna can be reached at [email protected].
