The legislative battle with cannabis in Europe has been long and arduous – and continues to evolve with each passing month. But this is not the only challenge that cannabidiol (CBD) manufacturers and distributors have to overcome. In light of the recent global pandemic, CBD businesses across the world have been forced to navigate a myriad of supply-based challenges. Even prior to the pandemic, the market was beginning to hit a wall in terms of availability and demand. With a lack of an established supply chain, many of these growing CBD suppliers in Europe are falling victim to government short-sightedness, and the lack of established cannabis supply chains. Fortunately, one may be able to leverage the full cannabis value chain without having to create it themselves.
The Effects of the Pandemic on the CBD Supply Chain
COVID-19, since its initial outbreak, has completely disrupted the retail, pharmaceutical, and farming industries; all markets which cannabis and CBD intersect with. These disruptions have trickled down the CBD supply chain and have started to impact the sales revenue of many of these CBD oil manufacturers. A leading market research provider for the global cannabinoid industry reported that U.S. CBD market growth in 2020 was 10-15% less than what was projected prior to COVID-19. While the CBD market did grow substantially in 2020, this now $4.3 billion industry is now beginning to face the consequences of poor supply chain management.
Without a diverse, vertically-integrated supply chain, most European CBD suppliers don’t have the operational flexibility to manage most of the pandemic-induced changes. With employees falling ill, ports closing, and transportation routes changing, many CBD oil manufacturers and distributors have had to slow down or stop their activities at one point or another. Production and delivery halts like this can have a huge financial impact on CBD businesses; especially during a pandemic where each bit of sales revenue is valuable. Part of the reason why the cannabis industry in particular has been hit so hard by COVID-19 is the change in consumer behaviour.
As detailed in the above report, the major cause for this disruption in sales is the change in consumer behaviour, not a reduction in demand for CBD. In the midst of unemployment and job uncertainty, it isn’t a surprise that consumers have opted for different – possibly more conservative – spending patterns. But just because consumers are buying differently doesn’t mean their demand is any less. MJBizDaily reported that even though consumers are purchasing cannabis products less frequently, they are buying more per visit. The online cannabis news outlet also described how ‘essential’ business status has played a large role in the companies that have seen favourable pandemic sales. All of this addresses the impact of store and dispensary closures on CBD, and how reliant the industry is on in-person transactions.
So, how should CBD suppliers in Europe look to overcome the limitations of in-person transactions, pandemic-related stoppages, and future unexpected events? One way may be through improving your supply management solutions using ERP software.
ERP Software as a CBD Supply Management Solution
Enterprise resource planning (ERP) is an excellent supply chain management tool for businesses to better utilize and connect their different processes and data inputs. ERP software, for instance, allows companies across industries to streamline processes related to finance, resource management, and manufacturing. Coincidentally, these are all key components of the CBD supply chain. Cannabis, and its products, have become huge embracers of technology in recent decades – particularly when it comes to indoor cultivation; where almost every environmental factor can be managed and controlled. The greatest benefit of ERP software for CBD distributors in Europe is the ability to maximize your cost-efficiency and process flexibility.
Most CBD distributors work with several different European CBD suppliers on a regular basis. This provides distributors with the flexibility to redistribute their purchasing relationships based on product quality, availability, and price. Unfortunately, it can be difficult to assess these relationships ahead of time. And when an unexpected event, like a global pandemic, arises, it can be extremely difficult to adapt. Similarly, if you adapt too late, your desired CBD oil manufacturers may have already re-aligned their production to accommodate other CBD suppliers in Europe. By integrating ERP software as a CBD supply management solution, distributors are better positioned to reorganize their supply chain without massive disruptions. If a primary supplier’s materials suddenly became unavailable, for example, the ERP system would already have a list of vetted and documented alternatives that meet your firm’s desired safety and quality standards. A lack of this type of flexibility, as caused by restrictive legislation and industry infancy, has limited many of the pandemic-proof elements that the CBD industry possesses.
CBD Suppliers in Europe Not Utilizing Full Cannabis Value Chain
As Europe finally begins to introduce its own CBD oil manufacturers, governments will have to take a more forward-thinking approach when it comes to building a strong, valuable, and sustainable CBD supply chain. Some CBD markets have already failed to adopt this long-term perspective and have instead limited themselves to being exclusive raw materials providers instead of vertically-integrated organizations. Prohibition Partners recently recognized that new cannabis producers in the south of Europe may be in danger of such a phenomenon. Rising cannabis markets like Portugal, Spain, and Greece may be limiting their own success as a future CBD market player by not investing in widespread domestic access schemes for their cannabis exports. While this avoids short-term costs, it also limits long-term benefits. Companies and markets with more sophisticated and established supply and distribution systems will be able to extract more from the value chain over time; maximizing their financial success. But what if your local market doesn’t have the infrastructure to support such supply chain aspirations? Fortunately, there are some pre-established supply chains that European CBD distributors can take advantage of.
CanX is a vertically-integrated, CBD wholesale manufacturer that efficiently produces, cultivates, and sells its product to a variety of global CBD distributors. By partnering with CanX, your business can also leverage the flexibility and cost-effectiveness of the CanX supply chain. Learn more about how you can overcome the challenges of COVID-19 and beyond with a reliable supply chain partner in CanX. Contact us today for more information.