Buyers beware! It is likely the contract changes represented in this article will hit animal health companies at some point. We’re sharing excerpts from the article.
Pandemic-driven strains in supply chains are triggering changes in contract terms between suppliers and their manufacturing and retail customers as companies try to address the risks and added costs brought on by persistent delays and disruptions.
For inventory managers, focusing on key A and B SKU forecasting is advised. Increasing the QOH levels along with adjusting ROPs and EOQs may prevent stockouts caused by backorders created by delays in supplier channels.” – Kirk Augustine
Source: Wall Street Journal, September 22, 2021. Link. Some suppliers also are looking to include what the contracting experts call dynamic pricing, or the ability to adjust prices if costs shift outside a certain range during the time covered by a contract.
INSIGHTS: The video explaining the inflation in the toy industry is a good example of how channel disruptions affect finished goods pricing. We’ve already seen stockouts in retail for more than six months.