More Americans are aware of supply chains than ever before. Before the Covid-19 pandemic, you would be hard-pressed to find an everyday consumer who understood supply chains, let alone the direct impact they have on their own purchasing experience. Today, however, the phrase “supply chain disruptions” has become common in news and social media, and consumers are personally feeling the impact.
With manufacturers facing material delays and shortages, consumers are struggling to find some of their preferred products. And while they understand that the shortage of their preferred choice is likely due to supply chain disruptions, many consumers believe that port backlogs and limited manufacturing during the pandemic are still the primary causes of the issues plaguing supply chains. They do play a role in the global disruption of trade and transport, but events in 2022 and decisions made at the start of the pandemic have combined to extend disruptions further. “We are now seeing the impact of decisions made during the shutdown in 2020,” says Shelby Koos, Double Good’s Supply Chain Director. “Plants changed their planning or cut capacity due to Covid-19, and those reductions in output are only being felt now.”
For industries like ours, where some raw materials have long life cycles, we do not see the impact of supply chain decisions until up to two years after they were made. So we did not experience many disruptions in 2020 or 2021 because of the actions we took in 2018 and 2019. For example, if our farmers could not plant corn this year, we would not feel the impact until 2024, as that is how long it takes for the new plants to mature before harvesting.
While we and some other industries often experience supply chain constraints a year or more after the disruption, some situations create immediate disruptions for every industry.
As the war in Ukraine has directly disrupted the lives of millions and created unnecessary destruction, it has affected consumers in ways they don’t even realize. It has disrupted the flow of three major commodity products used by manufacturers across the globe: corn, wheat, and sunflower oil. It has disrupted the energy market, including increases in crude oil prices that can have similar impact across various products, from edible oils like canola and corn to the film we use in our packaging.
At the same time that industries are experiencing material shortages, many are also experiencing unprecedented demand. Forced to choose between buying an alternative brand or product that doesn’t meet their expectations or paying more for the quality they prefer, consumer behaviors are again shifting from pandemic patterns: they’re buying more than they need. Opting to buy more of the products they prefer before supplies run out or prices increase further, consumer over-stocking is also impacting supply chains.
“Take butter, for example,” says Koos. Supply chain planners expect butter prices to spike annually during the year-end holiday season. This year, prices have begun rising faster than expected due to an early increase in demand. “It’s not that people are using more of it; they’re just trying to grab it before anyone else can.” Worried that they won’t have enough butter for holiday baking, consumers are hoarding butter now.
In order to maintain quality, maneuver around supply chain constraints, and meet soaring consumer demand at a price buyers will accept, companies are sloughing off pre-pandemic supply strategies and adjusting to a new reality. “Before Covid, the best practice in supply chain strategy was to have just-in-time (JIT) inventory,” Koos explains. “The goal was to have only as much inventory on hand as was needed to fulfill orders.” New raw inventory was then received at the lowest volumes necessary as frequently as needed. “This has completely flipped on its head since 2020.”
At Double Good, we have spent the better part of 2022 making investments and adjustments to meet the challenges faced by others. It is incredibly inspiring to see our customers fundraising at record-breaking levels. The generosity of our customers’ supporters has been exponential, resulting in our customers raising the most funds in a single day recently. And we know what their supporters expect from their purchase: remarkably delicious popcorn bursting with flavor and the perfect crunch.
“Our commitment to our quality is so strong that if we were to face a supply chain disruption that couldn’t be resolved in the short term, we would not offer that flavor until we could once again offer it in its best form.” In order to maintain that quality in today’s supply chain environment, we had to make changes to our procurement and supply strategy. To ensure we always have the necessary ingredients on-hand and can pop, pack and ship orders less than 48 hours after an order is placed, we invested in high-density racking that provides more storage. The team has also been vetting backup suppliers for critical ingredients, but they must meet our quality standards. Furthermore, procurement has become a dedicated role at Double Good to prevent supply chain disruptions in the future. As Koos said matter-of-factly, “We are not going to sell subpar popcorn.”
All these investments to meet demand are ultimately due to one factor proving to be more powerful than even supply chain disruptions: joy created by generosity. Our customers are raising more funds and making greater impacts in their communities than ever before in the form of scholarships, sports equipment, technology for learning, and travel expenses, to name a few. And we are committed to doing what it takes to support their growth by continuing to freshly pop and ship the joy-luxe popcorn supporters can’t resist.