NPD and Reformulation Offer a Way Out

by | September 26, 2022

Consumer packaged goods (CPG) brands continue to grapple with manufacturing and distribution challenges. However, despite these ongoing issues, reformulation and new product development have emerged as a light at the end of a long, dark tunnel.

Evolving regulations and changing consumer preferences often force brands to modify products or launch new ones. But what’s the status of the lingering supply chain disruptions? Why are they still with us? And how can CPG brands get the ingredients they need for new product development and reformulation?

Pandemic-spawned supply chain bottlenecks have tightened, squeezed harder by the Ukrainian conflict. Supply chain issues and ingredient shortages have also threatened food formulation processes for established products and pending research and development. And the ingredient shortage and dearth of labor have fueled inflation, crippling sales.

Brands must uncover innovative ways to address the new product development and reformulation challenges amid shortages as they strive to remain compliant with regulations such as labeling claims for quality, safety, and ESG. Amid this mounting chaos, brand owners shouldn’t worry about finding and vetting unproven suppliers from unfamiliar regions.

But a groundbreaking, technology-based network that links manufacturers with suppliers can help.

The chain reaction that blew up the supply chain

A dominoes started falling more than two years ago, which has led us to where we are today:

  • The COVID pandemic forced the shutdown of nearly all non-essential production in the spring of 2020. And even as plants started ramping back up, workers took longer to return, which triggered a drastic reduction in output. We still haven’t caught up.
  • The Great Resignation of 2021 gutted an already anemic labor pool. As a result, companies started bumping up wages significantly to keep their plants running.
  • Rising fuel and raw material costs, coupled with a lack of ingredients and distribution backlogs, have only made things worse – shortages persist, prices keep climbing, and consumers suffer.
  • Geopolitical conflicts have only driven up costs further. For example, Russia’s invasion of Ukraine has spurred further economic and supply chain upheaval in addition to the humanitarian crisis.
  • The inflation rate this year has surpassed 40-year highs. As a result, the Federal Reserve started propping up interest rates for the first time since 2018 and will likely spur additional rate hikes to curb inflation.

Inflation’s hit the food sector particularly hard. Analysts expect cooking oils and farm-level wheat to jump 40% before the year’s over. The cost of oats has already risen 98%.

There’s no simple solution. But it’s become increasingly apparent that coordination across departments and between suppliers and manufacturers is essential. Such cooperation would enable brands to obtain ingredients for new product development and reformulation efforts and maintain a steady supply of ingredients at the best possible price.

TraceGains offers that solution.

A grim outlook for consumer product brands

According to Deloitte’s 2022 Consumer Products Industry Outlook, three issues still plague CPG brands:

  1. The broken supply chain.
  2. Labor shortages.
  3. Rising prices.

Prominent CPG industry professionals acknowledge the difficulty in avoiding price spikes. And we recognize the Gordian knot the industry is entangled with —it’s challenging to resolve the first two issues without making the third worse.

Can companies succeed by raising prices to cover ingredient costs, or will inflation cause multiple brand failures? First, experts note the basic economic fact that rising costs hamper demand. This is especially true if companies can’t find affordable ingredients to fuel new product creation or reform existing SKUs to meet consumer demand.

The state of the industry remains grim. But TraceGains can empower brands with a better way to secure ingredients. Our technology can link brands with the ingredients they need in real-time. Research and production can carry on seamlessly by finding what they need when they need it at the lowest possible cost.

Reformulation meets the challenge head-on

Developing new products – and improved versions of existing ones – remain essential if brands want to stay competitive. However, when ingredient availability becomes challenging, maintaining “business as usual” is a challenge at best.

Those who succeed, however, must see possibility in the most uncertain conditions. In this case, being open-minded about finding new suppliers wherever they are and experimenting with new formulas, or versions of in-demand products could secure a more profitable future.

All you need to adopt this strategy effectively is a way to find worldwide suppliers of every ingredient you might need.

A cost-control, reformulation solution

TraceGains helps you find suppliers with the ingredients you need at a reasonable cost by making it easy to connect with them. We’ve built the world’s only Networked Ingredients Marketplace that delivers agility and productivity to brands, suppliers, and co-manufacturers.

TraceGrains supports competitiveness amid challenges for CPG brands by helping you:

  • Better manage compliance and safety risks.
  • Easily prepare for and comply with audits.
  • Save time and money while exchanging information with supply chain partners.
  • Quickly locate alternate supply sources that meet specification requirements — to reformulate existing products, find alternate ingredients and suppliers, develop new products, circumvent supply chain disruptions and shortages, and gain competitive advantages.

Our Networked Ingredients Marketplace operates a lot like LinkedIn – but for ingredient suppliers of ingredients and manufacturers. We’d love to show you how it all works. Request a demo today.

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