Raise of hands, who is now a “germophobe” because of the COVID-19 pandemic?
With COVID-19 causing a spike in health mindfulness, the nutraceutical industry is booming. People are investing more in health and wellness, and thus, a shift has taken place in how consumers purchase goods. Fewer people are stopping at the local store to pick up supplements and instead turning towards the internet for their shopping.
As our culture adapts to this new way of living, we’ll need to take a close look at the effects of specific industries. Through the lens of third-party logistics (3PL) warehouses, we will look at the pillars of success needed for nutraceutical fulfillment—including fulfillment for subscription opportunities, tech-enabled supply chains, and the core functionalities of private labeling products.
Last year, we saw that the fastest growing 3PL warehouses were 71% more likely to service pharmaceutical or nutraceutical customers as compared to slow or no growth 3PLs.
When it comes to the nutraceutical industry, how are distribution centers prevailing for market advantage?
Subscription Services
With growing competition from distribution leaders like Amazon, it’s important to stay relevant as to what is happening in the market. More often, the industry has seen increased momentum towards subscription-based programs, with nutraceutical brands experiencing a 27% growth in subscriptions in 2020 as compared to 2019. By building out subscription programs, this allows brands to incur recurring revenue streams while providing ease of access to the consumer.
For 3PL warehouses, this means having the infrastructure to fulfill a large wave of subscription orders each month. This includes optimization through automation in a variety of ways: having the mobile scanning horsepower to complete large wave picks, the staff to complete those assigned picks, and large-scale batch shipping label generation. Having a robust infrastructure for high volume increases opportunity to onboard brands with subscription strategies.
Technology Stack
At this point, having a succinct supply chain and valuable technology stack could be synonymous. Since the rise of ecommerce, it has become an inherent requirement to demand effective technology to enable efficient operations. This includes brands utilizing shopping channels, but it also means a robust warehouse management system (WMS) and order management system (OMS) to ensure manual processes are eliminated.
Specifically, with most third-party logistics (3PL) companies doing nutraceutical fulfillment, it’s important to find automation behind allocation of inventory and keeping goods among multiple brands segmented, especially when they all may be a same or similar product. It’s easy to lose sight of inventory ownership when there is a “sea” of pallets of the same product but tracing that ownership can be key for capturing necessary track-bys including expiration, lot, etc.
Private Labeling
The core of nutraceutical distribution lies within its operations through private or “white” labeling. This may include fulfilling the same product for multiple brands with appropriate labels.
While we have mentioned the importance of being a technology-enabled warehouse, make sure that any warehouse management systems (WMS) you are evaluating will meet the compliancy needed for this type of fulfillment. Specifically, validate that there is something in place to easily allow the transfer of product ownership and affixing labels to bottles. This may also mean including a kitting module within the application.
Private Labeling can affect the picking strategy across the warehouse. Instead of leveraging a traditional wave pick or a pick-to-bin strategy, it may make more sense to omit a traditional pick entirely to include prepackaged product at a pack station. This can prevent excessive movement while reusing the same product for several brands.
Success in Nutraceutical Fulfillment
Understanding the nuances of subscription fulfillment, unique technology requirements to meet compliance requirements, and having a robust private labeling solution represent the hallmarks of a successful 3PL in the nutraceuticals industry. With ever-changing conditions, 3PL warehouses must stay abreast of current market conditions and, more importantly, learn how to stay ahead of the curve.
To learn more about how Extensiv 3PL Warehouse Manager can optimize your warehouse for nutraceutical fulfillment, contact us for a product tour.
