When the Supply Chain Breaks

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Amid supply chain issues, debt, increased competition from other cosmetic brands, and changes in consumer behaviour, Revlon, the major beauty brand, recently filed for Chapter 11 bankruptcy protection in the U.S. The 90-year-old multinational makeup company claimed that it will receive $575 million (£469 million) in financing from existing lenders; this is to help keep its day-to-day operations running.

In addition to the Revlon brand, the business also owns famous labels such as Almay, Elizabeth Arden, and Cutex. This kept them on shelves for many decades. However, in the face of strong rivalry and fierce competition from other beauty brands, such as Kylie Cosmetics, Fenty Beauty, and Proctor & Gamble, Revlon failed to capitalise on the latest social media trends and alterations in consumer behaviour. To demonstrate, issues intensified when their lipstick sales declined 21% in 2020, due to the increased use of masks during the coronavirus pandemic.

Aggravated by the pandemic, the global supply chain disruptions that have been impacting other major international businesses and the issue of higher costs have been the cause of Revlon’s troubles. In March of 2022, the brand stated that logistical problems adversely affected their ability to keep up with customer demands, while the shortage of labour and increase in prices for key ingredients for their lipsticks set them back even further. 

Operating a seamless and effective supply chain should be a primary focus for both big and small corporations. In a recent study, it was discovered that 2020 witnessed the highest level of supply chain disruption ever. That’s why it’s imperative that companies are prepared for disruption and anticipate consumer demand before it hits. To mitigate any disruptions caused by global supply chains, businesses should utilise the Just-In-Case approach (JIC).

With this in mind, how is the current state of the global supply chain affecting businesses, and what can be done to ease this change?

Comprehending The Risks

Following the two-year supply chain disruption brought on by the pandemic, companies were unprepared when customer demand increased once again. Various industries, such as the automotive and logistics sector were seriously affected by COVID-19. Suppliers were suffering from many COVID-related delays, which inevitably resulted in a huge setback. In relation to this, China’s ‘Zero-COVID’ policy created a knock-on effect to supply chain issues. With Shanghai being the ‘world’s largest port and China’s financial hub’, temporary interruptions at these major ports will have a huge effect on operations in the next coming months.

Furthermore, in a McKinsey’s panel discussion at 84th Inland Transport Committee Roundtable, Tom Bartman discussed 3 challenges facing the global supply chain. He attributed issues arising to labour shortage, claiming that it is a ‘global phenomenon that is affecting nearly every market that executives are operating within their supply chains’. He states that this issue isn’t easy to overcome, as there is limited engagement among a younger audience to join the workforce, for instance within the transport industry. In combination with an aging workforce, this has led to a global labour shortage. Other factors include a lack of logistical equipment and the ripple effect of global bottlenecks that can impact the entire supply chain and result in a delay.

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