Supply Chain Issues

These days every business everywhere is affected by supply chain challenges. Across the board, we are dealing with scarce product, delayed product, increasing prices, and fewer alternatives than ever for some specific products. Yet, the pressure from end-user clients for products on brand, on time, and competitively priced continues with an ever-increasing cadence. What’s being done to relieve the pressure?

Speaking off the record because they were not authorized to comment on the inventory situation, two executives of separate distributors recently shared that the pressure brought on by global supply chain challenges has tempted some of their competitors’ staff to color outside the lines of safety protocol in order to meet the needs of their customers. Vendor qualification protocols have been stretched, and products with less than rigorous testing regimens have found their way to end-users’ customers already. Both of these executives spoke about their concern for the industry in general, and also shared that they felt their own existing internal controls were sufficient to keep safe product shipping from their companies.

During other conversations with promo product industry execs, Nicki Staats, the global vendor manager for National Pen, shared that she has not seen that kind of pressure from their customers, mostly because those customers expect them to deliver safe products. Nicki said that at National Pen, they are still maintaining their normal evaluation and testing requirements — and she doesn’t ever expect to compromise on that front. “Our customers wish to provide safe products to their own customers, so we have not experienced this issue,” Staats said. “However, if this did happen, we would educate the customer that National Pen partners with sources that see the importance of product and social compliance. The regulatory standards that have been established are for the safety of consumers as well as for those producing the goods. While these standards may add to the cost of the goods, consumers can make purchases knowing that they are safe and compliant.”

Larry Whitney, principal at consulting group Whitney & Whitney, says there are good reasons for the regulatory requirements that govern safe products. Companies that cut corners on product safety are simply gambling that they won’t be caught. “That can be an expensive gamble. Who in the Promo industry can suddenly afford to eat a five, six or seven-figure expense due to an unsafe product?  The CPSC has recently been demonstrating that they have some teeth, and companies ignore them at their peril. You only need to look at what happened with the Peloton recall recently to see that.”

“I think it is important that safety is not confused with the other economic issues around staffing, shipping, resin costs, and other expenses,” Staats added. “Product and social compliance, coupled with product quality, may increase the price, but should never be sacrificed to offset other factors that are increasing costs. If consumers wish to receive the same quality product they previously purchased, we all have a responsibility to educate them on the true economic factors that resulted in a cost increase.” 

Whitney’s consulting group offers consulting services for importers and distributors to improve product safety, corporate social responsibility, sustainability, and supply chain compliance programs. His clients are certainly sensitive to the increasing pressure of doing the right thing when it comes to product safety in an industry with already thin margins. But, he has a great answer for distributors trying to explain supply chain-related challenges, rising prices, and delays to their clients. “The supply chain issues today may have led to unexpected costs, but the American public expects that the products that they purchase, or receive, are safe and the costs to meet that need should be built into the product.” And hasn’t a transparent and detailed pricing structure really been the answer to purchase price pressure all along?