Dietary Supplement Supply Chain Update: Major manufactures use force majeure to cancel orders.

My past updates have been fairly negative and rightfully so, as the supply chain across this country is a disaster and continues to worsen every day. This is true not only for the dietary supplement industry but also for all industries. We’re now seeing the problem caused by this manifest in our daily lives with price increases in cars, trucks, food, construction goods, travel, electronics, and so on.

The attached letter will further demonstrate the extent of the problem. It is a letter from Mitsubishi International Food Ingredients officially declaring force majeure. For those who don’t know what this means, force majeure is a legal clause commonly included in contracts that allows either party to cancel the contract, without liability, for unforeseeable natural and unavoidable catastrophes beyond their control. Mitsubishi and many companies have found themselves in an unavoidable situation where they had to do just that: cancel all contracts with their customers.

Imagine the extent of the damage that a company the size of Mitsubishi sustained that drove them to publicly declare force majeure, thereby canceling all existing contracts with their customers. This could not have been an easy decision for Mitsubishi because the loss of revenue, goodwill, and reputation in the marketplace is staggering and could take years to rebuild. Yet Mitsubishi and other companies in the same situation have found no other alternative.

By no means should this reflect poorly on these companies. For the most part they are doing what they have to protect both themselves and their customers. The worldwide supply chain crisis is real. Factories globally have shut down due to COVID, China has prolonged energy and pollution issues that are forcing factory shutdown, transportation logistics is a nightmare.  

We receive daily letters from vendors announcing unavoidable price increases and shipping delays caused by supply chain issues out of their control. I have attached one such example so you can better understand the extent of the problem.

I hear Monday morning quarterbacks lecturing that better forecasting, planning, and advance contracting of goods would have prevented the supply chain problems that so many supplement companies are feeling. In normal times, I would agree, but these days, contracts, POs, and delivery schedules are nothing more than wish lists. In many cases, they even hurt those that relied on them while ignoring the warning signs of what was coming.

By: Mark Glazier
NutraBio Labs, Inc.
CEO & Founder

Other Supply Chain Updates by Mark Glazier

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