Diversifying supplement supply chains: Navigating global challenges for managers

China is incredibly efficient and produces high-quality raw materials used in most dietary supplements sold in the U.S. market. Yet diversification of supply chains is being discussed by brands thanks to recent macro forces — the pandemic, its related effect on global inflation, the Russian war in Ukraine and realpolitik musings on how it might influence China’s action vis-à-vis Taiwan, and saber rattling for domestic audiences both in China and the U.S.

The SARS-CoV-2 virus that upended societies and economies across the world is still exerting temblors. While the cost of shipping as well as lead times have improved significantly, ingredient buyers and supply chain managers must still contend with price fluctuations, some due to importation tariffs.

While the cautiously optimistic hope is that supply chain headaches will subside, the challenge remains around the rapidly increasing price of Chinese herbs across the board. This affects demand, availability and supply all at once.

The history of sourcing nutraceutical ingredients, whether botanicals or specialty ingredients, has always been one of moving to search for ever lower-waged workers. India has emerged as a source. Already, India is a major supplier of herbal extracts for the $13 billion U.S. herbal and botanicals market, with about a quarter of the top 40 extracts being of India origin.

Yet India — or any other national source — would have work to do to catch up with China in other areas like chemical manufacturing capacity and expertise.

So how does a supplement brand, broker or contract manufacturer go about looking to diversity its ingredient sources? What are the considerations at play? How can bridges be built to other places like India — which is eager and ready to take the next step and help establish itself as a quality global producer?

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