The spa industry relies on its wellness products, and if you have ever experienced a product shortage, you already understand the importance of prompt delivery. To ensure your clients are able to get healthier naturally at your spa, you need to truly understand your supply chain.
What Every Spa Should Know About Their Global Supply Chain
The pandemic has caused numerous interruptions in the global supply chain, making it hard to predict when products will arrive.
Still, the following facts about supply chains remain true.
1. Sudden Spikes in Demand Can be Misread
Consumers trigger demand by buying a large number of the same item at once. Companies will respond by placing orders upstream, but that can cause even the smallest supply chains to run amok. That’s because sudden spikes are interpreted as industry shifts when they likely aren’t.
Once companies realize they’ve ordered too much, they’ll slash their orders, causing a “bullwhip effect. This disrupts supply chains significantly and can be avoided if companies utilize data.
2. Supply Chains Have a Lot of Moving Parts
A supply chain can be split into two phases: the production side and the distribution side. The production side is made up of several tiers of suppliers, and these tiers can be advanced if you’re purchasing technology. But it’s rare that spa products pass through over 100 suppliers.
Spas typically use simpler supply chains that start on the distribution side, which likely have steps that connect a manufacturer to a retailer via a trucking link. Unless your spa’s factory is far away, first-mile tracking (the first leg of your supply chain) will start at your local warehouse.
3. “Just-In-Time” Production May Work for You
“Just-in-time” production systems will order exactly what they need when they need it, which prevents overstocking. Spas can do this if they’re ordering perishables and their suppliers or factories are close to their location, but this practice isn’t sustainable for global networks.
If you know you need certain products in advance (or you always need extra stock), adopt a “just-in-case” production mentality instead. However, you should never go overboard because…
4. Over-Ordering Makes Shortages Worse
Spas must find a happy medium between “just-in-time” and “just-in-case” production to avoid global supply chain disruptions. Businesses often resort to panic buying when a disruption occurs because they want to be on the safe side or think they’ll be able to win market share.
In the short term, this makes anything in short supply harder to get, which creates problems for other businesses. In the long term, spas are stuck with supplies they can’t sell. For this reason, spas should keep a bit of “just-in-case” inventory to last during a disruption and avoid bullwhips.
5. Long Supply Chains are Filled With Errors
It’s in your best interest to have a short supply chain rather than a long (or international) one. Longer supply chains are more susceptible to disruptions, making it harder to plan delivery dates. That’s because when one part of the supply chain is disrupted, it creates a domino effect.
Before the pandemic, each step in the supply chain process was pretty predictable, but delays are as common as ever. Switching to a short supply chain will instantly benefit your business.
6. Congestion Removes System Capacity
Our international transit routes are grouped into two categories: trans-Pacific and trans-Atlantic. Over the past few years, the trans-Pacific route has experienced a lot of congestion, making it harder to process a high amount of cargo. This caused less capacity and higher freight rates.
Unless your products are made locally, your spa will be affected by cargo congestion, but this disconnect often causes worse problems. For example, you may wonder what the hold-up is and attempt to order more products to get ahead of the next wave, producing a bullwhip effect.
7. Bottlenecks are Typically Hard to Spot
Lack of visibility can also make it harder for spas to spot where the bottleneck started. It’s often thought that the bottleneck occurs internationally or at the port, but it’s often found locally at the warehouse. If your warehouse is at capacity, your products will sit on the ship for much longer.
Even when you don’t have a problem unloading your containers, other businesses might. If managers stop throwing money in the wrong place, they can prevent future bottlenecks.
