Easter Supply Chain: Demand And Sustainability Concerns Keep Businesses Hopping
According to the National Retail Federation, 81% of Americans are expected to celebrate Easter, spending a whopping $24 billion. And while Easter is a joyful celebration for many, let’s not forget about the myriad complexities happening behind the scenes involving the manufacturing, designing, and delivering of millions of pounds of jellybeans, chocolate eggs and ham. If your business hops around the myriad challenges of the modern-day Easter supply chain, consider the following best practices to mitigate risk, fluctuating demand and sustainability concerns.
Reducing supply chain risk
Working on seasonal demand products requires effective demand planning and forecasting. Any sudden change in market trends or customer shopping behaviors can disrupt the chocolate supply chain’s normal flow, leading to shortages or surpluses.
“Supply chain starts with a good demand forecast that ensures a good balance between inventory levels and risk of stock-outs / loss of sale,” said Ashish Punjabi, PwC Principal and Supply Chain Partner in PwC’s SAP practice. “These issues can be accentuated when the product demand fluctuates due to market conditions like political environment, product seasonality, natural calamities or weather issues.”
Imagine a poor cocoa bean harvest halfway around the world, causing delays, blockages, or other problems when shipping raw materials or finished goods. Manufacturers and retailers might be left with idle production lines or empty shelves. Thanks to well-reported glitches in our global supply chains, many businesses have a renewed focus on designing risk out of their supply chains and manufacturing operations.
By utilizing predictive analytics to analyze, for example, the weather forecasts, traffic patterns and GPS data of shipments, companies can plan for contingencies such as delayed raw materials, stockouts, and supply chain disruptions.
Technologies such as machine learning and artificial intelligence algorithms can be applied to develop alternative scenarios to minimize the effects of disruptions. On-demand manufacturing, predictive demand forecasting and inventory optimization strategies also mitigate unexpected disruption, to ensure businesses are not left with (chocolate) egg on their faces.
Sustainable choices for a guilt-free Easter
It is reported that around 60% of the global cocoa supply comes from areas of the globe where in recent years unethical labor practices have been put under the spotlight.
According to PwC’s Punjabi, the source for cocoa is limited to certain geographies and as the demand grows the means of producing more cocoa might get compromised resulting in inventory disruptions and supply constraints. “Lack of good working conditions, better weather tracking devices and advanced farming equipment are contributing to the challenges for the growers to produce effectively,” he said.
Even though many chocolate manufacturers have launched sustainability programs for eliminating child labor from the chocolate supply chains, supporting farmers to improve income, ending cocoa-related deforestation, and producing products with 100% sustainable ingredients, the entire chocolate supply chain is extended by many intermediaries. How can companies ensure that all stages of the process are sustainable, and people are treated and paid fairly?
To make a meaningful and measurable difference in environmental and social sustainability, traceability is a must – not only to ensure the effectiveness and success of sustainability goals. This includes conducting business with suppliers who are aligned with the Fair Trade regulations to support the sustainable and ethical chocolate supply chain. Building this transparency enhances credibility and encourages stakeholders’ participation, leading to greater success in achieving sustainability goals at a larger scale.
And it’s not only the chocolate that needs to be sustainable. According to research, which includes 1,036 Gen Z consumers, 78% of respondents ranked the ability to recycle packaging locally as an important green trait. And according to another research study, 62% of European consumers said they would be willing to pay higher prices for food products that contain less plastic packaging.
Packaging is also a major focus of governmental and regulatory bodies. From early 2022, businesses in the UK have to pay a Plastic Packaging Tax (PPT) if they manufacture or import plastic packaging components which contain less than 30% recycled plastic. At the start of 2023, Spain also introduced a plastic tax of 450 euros per ton to virgin plastic packaging produced in or imported to Spain.
Developing risk resiliency and sustainability strategies requires rethinking the supply chain. Diversifying suppliers to reduce dependence on a single source certainly helps. Implementing eco-friendly and humanitarian sourcing practices, leveraging inventory optimization strategies and investing in the right technology to increase transparency and traceability. By prioritizing these risk management and sustainable best practices, companies can run supply chain processes that benefit both the planet and the bottom line.
To learn more, check out the Oxford Economics Research report “The Sustainable Supply Chain Paradox“