Supply Chain and Fair Trade: Lessons Learned from the Pandemic
By Tim Clarot, Industry Consultant
At this writing, we are approximately four years past the official declaration of the COVID-19 pandemic. The pandemic served as a learning experience for both manufacturers and consumers, raising awareness of supply chain fundamentals and the complexities. Challenges to the supply chain served as a catalyst for change, prompting industry and consumers alike to adapt, innovate, and reevaluate their priorities in the face of unprecedented challenges. This paper will highlight some of these learnings, changes in attitudes/behaviors, and opportunities for growth.
For drug manufacturers, management of their supply chain has always been a key element of good manufacturing practice (GMPs). It is incumbent upon the manufacturer to have control of sourcing of all materials, active ingredient, inactive ingredients, and packaging materials used to make the finished drug product. The pandemic highlighted vulnerabilities in many supply chains, causing manufacturers to shift towards building a more resilient and redundant system. Companies are now diversifying suppliers, sourcing materials locally (when possible), and maintaining strategic stockpiles to mitigate disruptions. Inventory management strategies have evolved to strike a balance between just-in-time (JIT) and safety stock. During the height of the pandemic, JIT often became just-isn’t-there.
The consumer was first introduced to the complexities of the supply chain initially by product availability and then by increasing prices. Consumer products and durable goods were both affected, causing month-long shortages and subsequent inflation. Many consumers gained a newfound awareness of supply chain fundamentals as they experienced disruptions in the availability of goods and services. Some of the supply chain fundamentals that consumers encountered or become aware of during the pandemic:
- Consumers became more interested in understanding the transparency and traceability of supply chains, particularly regarding the sourcing of raw materials, labor practices, and environmental sustainability;
- They sought information from companies about the origin of products.
Consumers increasingly value environmentally-friendly supply chains (Nielson NIQ What’s Next in Wellness 2024), resulting in a noticeable shift in their behavior towards more sustainable and ethically-sourced products. Overall, as awareness of environmental issues continues to grow, and as consumers become more empowered to make informed choices, the demand for environmentally-friendly supply chains is likely to increase further. Companies that recognize and respond to this demand can gain a competitive advantage in the marketplace.
As manufacturers continue to refine and strengthen their supply chains and to respond to changing consumer attitudes, a review of fair trade principles can provide a foundational template for a robust supply chain. These principles are built around economic, social, and environmental basics. A brief operational summary of such a program is:
Fair trade is a global movement and trading system aimed at promoting equitable partnerships, sustainable development, and social justice for producers in developing countries. It ensures that producers receive fair prices for their products, work in safe conditions, and engage in transparent and mutually beneficial trading relationships. Fair trade principles prioritize fair wages, gender equity, environmental sustainability, and community development. Through certification programs and ethical standards, fair trade organizations empower producers, improve livelihoods, and promote responsible consumption among consumers. More information about the specific elements and requirements for certification can be found at FAIRTRADE.
As we begin our fourth-year post-lockdown, we have found some items vastly improved and others frustratingly familiar. Manufacturers have attempted to strengthen their supply chains by prioritizing resilience, risk management, and technological innovation to navigate future challenges. Additionally, it is important to recognize that consumer and retailer trends have also changed post-pandemic. Manufacturers that adopt and embrace sustainability and eco-friendly products and practices can better serve these evolving needs and potentially gain market share.
Author: Tim Clarot is a consultant for Church & Dwight, where he was formerly Senior Vice President of R&D and Product Quality. With 40 years’ experience working directly with federal, state, and local regulators, Tim specializes in the regulatory framework of food (including dietary supplements), medical devices, and drugs (homeopathic and allopathic), both in the United States and internationally. He has also chaired company-sponsored scientific and medical advisory boards. He has served on AAHP’s Legal and Regulatory Committee since 2015 and on the Board of Directors since 2018. He can be reached at TClarot@gmail.com.