When Technology Scouting Comes Up Empty
The COVID-19 pandemic continues to stress supply chains 18 months later. Changes in consumer buying patterns and increases in demand have substantially disrupted inventory forecasting. Manufacturers experience supply delays and in turn, consumers shop empty shelves. In times of economic uncertainty, yet2 continually sees large companies turn to technology scouting to help diversify supply chains in order to protect product supply, market share, and profit margins.
Since the start of the pandemic, yet2 has conducted several searches for clients looking to prevent future disruptions to their supply chain. Most recently in March 2021, one of yet2’s long-time consumer healthcare clients approached us asking for help finding alternative suppliers of a key formulation (active ingredient + supplement) used in one of their popular over-the-counter product lines. The client already began working with one supplier who manufactured the formulation, and hoped to find additional U.S.-based manufacturers with the same capabilities.
When no preferred solutions arose, yet2 and the client quickly pivoted scope to identify seven targets that could meet the client’s needs with some additional capability development work.
The yet2 project team engaged our network, began scouting for potential suppliers, and conducted research and due diligence anonymously on the client’s behalf. In total, we scouted 70+ companies and proactively reached out to 50 to better understand their capabilities. Since there were many competitor products and private labels on the market, the client felt optimistic they could easily identify alternative suppliers.
Early in our search we identified that all U.S. private labels use the same supplier as our client, unbeknownst to the client. Additional research confirmed that the original supplier is the only U.S.-based supplier of the formulation. As we interviewed targets, we determined that 30 of the targets only met part of the required capabilities, and another 10 met all the required capabilities but were outside the United States.
The client hoped to solve this problem quickly by identifying alternative suppliers; however, yet2’s scouting confirmed that there were no other suppliers in the U.S. that currently had the full capabilities to manufacture this formulation.
Pivoting with Confidence
While finding no solutions to a technology scouting search is rare and not ideal, there is value in confirming that the preferred approach is not possible and that alternative, less attractive options must be seriously considered.
The results of finding no U.S. suppliers enabled yet2’s client to return to the leadership team and explain with certainty that they could not simply plug in alternative suppliers. Instead, they had to start considering the following options:
- Relax U.S.-only requirements and look internationally
- Partner with manufacturers of the active ingredient to develop the capabilities to formulate with the desired supplement
- Partner with manufacturers of the supplement to develop the capabilities to formulate with the active ingredient
Working with our key contact, the yet2 team quickly pivoted the project to expand scope outside of the U.S. We also contacted active ingredient and supplement manufacturers anonymously on the client’s behalf. The result was a short list of seven promising targets that met the expanded criteria and were open to partnering, and yet2’s client is further exploring each opportunity.
Technology landscape scouting exercises can help you discover new solution providers, verify your current partner is the best choice, or in this rare case, confirm you have no better options and must consider alternative strategies. If you are interested in learning more about how yet2 can help, contact us at email@example.com.