Supply Chain Crisis: Should Franchise Brands Turn to Hoarding?

On Tuesday, The New York Times released a column talking about hoarding. In the piece, authors Sapna Maheshwari and Coral Murphy Marcos discuss how some small businesses may stockpile supplies and products in order to navigate the troublesome supply chain issues they are currently facing— and franchises are no different, although they operate on a much larger scale.

“For many small businesses, the unpredictability this year has forced them to make buying decisions months or weeks earlier than they normally would and to tie up more of their cash in inventory, which can be risky,” they said. Stocking up on extra goods is one way to avoid a potential shortage down the road — but creating that stockpile will limit the available supply even further.

The supply chain is getting worse under this model, but hoarding is something that franchises may have to implement in order to remain up and running. It’s one thing for an independent business to create a stockpile in their back room storage; it's a completely different matter for a nationwide franchise to do the same at each franchise unit. This could further damage the supply chain if larger orders are placed right now.

Fortunately, for several established franchise brands, they might be able to leverage some negotiating power to account for a shortage. A large-scale supply agreement, if constructed accordingly, can allow brands to work around hoarding and continue to receive stable shipments. This is one of the many ways a franchise brand can navigate a supply chain crisis better than an independent business can.

Brands are still adapting on many levels — and if it’s too late to create a stockpile, they may look to develop one out of something else. If a certain supply or ingredient cannot be fulfilled, a localized alternative might be able to fill the void.

“Because of these kind of delays, Etsy has viewed this moment as one in which small businesses can provide gift options that are not reliant on overseas factories and shipping,” said Maheshwari and Marcos. This rationale is time-sensitive with the holiday season upon us. It does help local businesses stay afloat after COVID-19 ran its toll on practically everybody. 

This makes it tough for a brand to find uniformity, however. If one part of a recipe is suddenly changed, people may notice. It could be for the better, it could be for the worse, but it most certainly isn’t for convenience.

Hoarding could be the only way to reach this uniformity — and in the meantime, it isn’t making the supply chain situation any better.