October 17th, 2022
The domestic cannabis industry is estimated to be worth 90 billion and is predicted to expand by 20% yearly. The government’s efforts to legalize and reform marijuana at the federal level would surely provide new opportunities across the nation. Still, the further strain on a supply chain that is already under pressure is worsening the growth.
However, it creates a huge opportunity in the supply chain, logistics and purchasing sectors for those with skills, technology and resources to manage such a fast-growing sector when production times and shortages are growing along with less staff and budget. Domestic market rates increased by more than 35% in 2021 due to rising fuel prices, growing trucker shortages, and increased consumer demand for deliveries.
What are the challenges of supply chain management?
The cannabis industry is experiencing the impacts of a supply chain crisis, just like any other sector. The industry’s largest problem in its early years was a lack of supply. Now that there is an abundant domestic supply, the issue is no longer with the product. Most suppliers report that the main supply chain problems are increasing shortages of packaging materials from abroad.
Although not specific to the cannabis sector, buying innovative packaging solutions abroad at the moment poses difficulties because of rising fuel prices, higher transportation expenses and longer production time. Cannabis businesses are being pushed along the supply chain due to the rising demand, limited supply and poor inventory management. Additionally, many companies in the sector still buy packaging supplies from just one vendor.
Solutions for the cannabis supply chain
There are several ways to help control expenses and maintain low prices for the end user, which can be initiated by forecasting and effective inventory management. The involvement of various vendors for specialized packaging solutions across the supply chain must become a normal procedure for cannabis companies. To guarantee that packaging materials are delivered on schedule and under budget, constant interactions regarding pricing and production hours with the cannabis supply chain are essential.
The takeaway for supply chain management
For cannabis businesses to rise and keep up with their exponential growth and increasing customer demand, they must rely increasingly on supply chain management. Before the pandemic, new companies succeeded despite using outdated supply chain management strategies.
Today growing fuel prices, transportation expenses, labor costs and shortage of materials are causing companies to reevaluate their supply chains and find solutions for the End to End Cannabis Packaging materials. Leading companies in the cannabis supply chain business depend on management, ERP systems and automated inventory control, which use major data to improve the reordering of packaging materials and forecasting.
These technologies enable these businesses to operate more efficiently while reducing stock outs and supply problems. Smaller companies are hoping to enter the cannabis market, where both need to pay special attention to their supply chains if they want to grow and succeed. Several turn-key options, such as cloud-based inventory solutions and ERP solutions customized from scratch, are available based on the company’s financial concerns.
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