It’s early in the new year, but those of us in the nation’s supply chain already have felt the chaotic ripple effects hitting from every direction, ranging from weather events to geopolitics to the threats of tariffs rocking U.S. imports and exports. And because international trade connects to just about everybody, all businesses are scrambling to adjust their strategies to stay competitive and minimize financial strain. This chaos makes executing especially challenging, even with AI now helping in predicting and planning. On the positive side, your competitors may have their own shortages, tariff issues, etc., at a much greater rate that can give you an advantage.
Now is the time to consider all of your potential resources, including value-add partners like next-gen co-packers who can help you conquer the supply chain chaos. Many of the solutions we have successfully implemented for our customers in the past can also be effective in addressing current challenges. That’s because co-packers operate at the end of the supply chain, right before the final product goes to retail. That positioning enables us to help our customers pivot, at the right time, in the right way, to get the maximum effect.
With that perspective in mind, here are some ideas that you may consider with a look at how your co-packing partner can help you plan ahead and execute effectively.
Shifting Final Assembly to the U.S.
The only certainty we have is that tariff threats, geopolitical risks and weather-related delays will continue to make the global supply chain more unreliable and expensive. In response, domestic producers must figure out how to minimize costs while also shifting much of the value chain back to the US. But absorbing all that in-house also requires significant investment in facilities, labor, and logistics that might not be feasible in the short term.
That’s where a professional co-packaging partner can come into play. With your co-packager focused on assembly that gets your goods ready for the retail shelves, your in-house production teams can focus on your core production and critical upstream activities.
Managing Excess Product
This chaos is going to create choppy waters for your demand channels as well, as finicky consumers are going to shift what they buy, when, how, and where due to your competitors’ own challenges. AI and war room gaming may help with predicting and planning, but actually having the right inventory available for the consumer still requires tight execution. In this new world, our customers have two options: (1) build up inventory (expensive, just in case) that sits ready for all retailers, or (2) deal with order uncertainty by using augmented resources that work at the last minute to accommodate individual surges in orders (just in time). That’s what co-packers offer.
Surging to meet demand is the better – and more cost-effective — choice. But it does require close coordination. We have done this many times; once for example, Wal-Mart spiked one of our customer’s order quantities by 150,000 units, one week before Thanksgiving Black Friday. Rather than prepositioning finished goods inventory (which is expensive), they were able to react by asking us to boost production of our Wal-Mart-related SKUs, which we did. Agility is more cost-effective and uses less working capital than holding excess inventory in reserve.
Repricing Products to Reflect Costs
Threatened tariffs could inevitably drive up costs, forcing businesses to reassess their pricing strategies. Some companies will be able to pass these additional expenses directly to consumers, adjusting price points to maintain profitability. In this case, we’ve been helping some customers by literally putting new price tags on truckloads of inventory. Others are exploring ways to absorb some of the cost increases by optimizing their supply chains, renegotiating contracts, or shifting to alternative suppliers with more favorable terms. Additionally, companies are reevaluating packaging and production efficiencies to offset rising expenses without sacrificing quality. The right co-packing partner who understands the landscape can make a big difference in any and all of these scenarios.
Pivot to the Right Partner
With so much uncertainty in the supply chain landscape, adaptability is key. Whether it’s reshoring production, rethinking inventory strategies, or restructuring pricing models, businesses must stay agile to navigate the evolving tariff situation. The Wheelhouse Family of co-packers includes five stand-alone facilities with ready access to transportation corridors and ports in the Northeast, Southeast, Southwest, Midwest and the Gulf Coast. We are built on agility, and our teams have been helping our customers build supply chain resiliency for decades. Reach out to us at packit@packvp.com to learn how we can help you manage supply chain chaos and be a calming entity in the midst of the storm.