In today’s fast-paced, social media-driven world, viral products are an exciting phenomenon. A product can go from obscurity to global sensation in the blink of an eye, thanks to the power of influencers and online platforms. While it may at first seem like a dream come true for brand owners, viral successes bring a unique set of challenges for the supply chain. What begins as a “good problem” can quickly spiral into a crisis if companies aren’t prepared to deal with the sudden demand surges.
In an age where instant gratification reigns, companies should still be focusing on extended strategies and cultivating relationships with supply chain partners and customers for lasting success. In this blog post, we’ll explore the complexities of viral product growth, the supply chain vulnerabilities that come with it, and strategies companies can use to traverse these challenges while planning for long-term supply agility.
The double-edged sword of going viral
We’ve all seen it happen before, products gain unprecedented attention through a social media post or influencer, amplifying the popularity of products in a short period and driving up sales. Like the TikTok video in November 2023 that sent Stanley cup sales soaring, or the rise of fidget spinners in 2017.
What started as a simple idea to satisfy a fidgeting habit in meetings quickly became a worldwide craze, and suddenly everyone owned or wanted one. Kids took them to schools, work events gave them out as branded freebies, and you could find them on every impulse-buy rack and every corner of Amazon and eBay. Sales skyrocketed but the overwhelming, sudden demand surge led to parts shortages, price hikes, and worried suppliers. Would the craze last? What would happen to all of the stock once the craze wore off?
Viral growth patterns
Spoiler alert – the fidget spinner craze did wear off, and not too long after it began. Sales for the toy peaked in May of 2017 and tapered off throughout the rest of the year. Like the fidget spinner, most viral trends are notoriously unpredictable and influenced by factors outside of a brand’s control. But typically, a viral demand curve looks like a steep, almost vertical rise in sales followed by a similarly rapid decline. The timing and intensity of these surges are incredibly difficult to predict, creating significant risks for companies that lack a clear strategy for scaling operations.
Common supply chain vulnerabilities of unexpected demand
When a product goes viral, it can expose weak points in a company’s supply chain, such as:
Lack of visibility: Companies may not fully understand, or be able to see, who all the players are in their supply chain. A viral surge could expose hidden dependencies or bottlenecks, such as raw material suppliers (Tier 1 and beyond), manufacturers, or transporters. Without full transparency, data, and collaboration with partners, it’s difficult for supply chain leaders to make effective decisions.
Raw material limitations: A sudden demand surge can outstrip available materials, especially if the product requires specialized components that are in limited supply. For example, when the PlayStation 5 (PS5) was released in late 2020, it experienced supply problems due to a global shortage of semiconductors, limiting its production.
Production capacity: Many manufacturers are not set up for sudden, large-scale production increases. Ramping up production so quickly is challenging and may involve overtime, reworking factory lines, or sourcing to other manufacturing sites to compensate.
Warehouse and logistics bottlenecks: Even if production can keep up, getting the product to the customer is another hurdle. In some cases, logistics networks may be overwhelmed by the surge in orders, leading to delayed shipments and frustrated customers.
Risk assessment and contingency preparation
To avoid getting blind-sighted by a sudden demand surge, companies must take proactive steps to assess their supply chain risks and prepare accordingly. Here are a few tips to consider:
Supply chain stress testing: Just as companies test their financials under extreme conditions, they should also stress-test their supply chains. This could involve running simulations to see how the supply chain would handle a sudden demand for certain products.
Building relationships: Strong relationships and collaboration with suppliers, manufacturers, and logistics providers are crucial. In times of crisis, companies with well-established connectivity will be better positioned to negotiate priorities and work through challenges by sharing real-time data.
Flexible capacity planning: Creating flexible manufacturing and logistics systems can help you quickly scale up (or down) depending on the demand. Having contingency plans for extra shifts, outsourcing, or tapping into alternative suppliers can make all the difference.
Here’s a webinar that discusses an example of a well-known beverage company that overcame logistics challenges stemming from unexpected, rapid growth.
How to respond to a viral demand surge
When demand suddenly spikes, quick action is needed. Here’s how companies can respond:
Immediate assessment and triage: As soon as there’s an increased desire for a particular product, assess where the bottlenecks are. Are there delays in raw material sourcing? Are your suppliers able to scale up production, if necessary? The faster you can identify problems or potential problems, the quicker you can resolve or get ahead of them.
Communication with customers: During periods of high demand, customers need to be kept in the loop. Clear and honest communication about delays, stockouts, and estimated delivery times can help manage expectations and maintain customer loyalty.
Communication with suppliers and manufacturers: Gaining visibility into materials at all nodes of your network and collaboration between suppliers and manufacturers allows for better management of shortages, excesses, impacts, and resolution.
Communication with other supply chain partners: Sudden increased demand affects all supply chain partners. It means more warehouse space, more shipments, more parts, and more demands on manufacturing to meet consumer appetites. Bi-directional visibility and insights up and down the supply chain allow businesses to improve resiliency and agility to quickly respond to any unexpected market conditions.
Long-Term Solutions to Prepare for Future Demand Swings
To build a more resilient supply chain that can handle sudden growth, consider the following long-term adaptions:
Scalable manufacturing: Establishing relationships with manufacturers who have the capacity to scale production quickly will help you meet surges without scrambling to find a new partner.
Demand forecasting systems: Implementing advanced demand sensing and supply sensing tools can help predict potential spikes and ensure your supply chain is prepared.
Diversifying suppliers: Relying on one supplier can leave you vulnerable. By diversifying your supplier base, you can reduce the risk of supply disruptions and improve your ability to meet demand.
Leverage a digital twin: Shadow planning capabilities allow you to run scenario planning simulations on a digital twin of your supply chain, enabling you to create contingencies that enable the rapid adjustment of inventory levels across distributed networks.
Employ smart supply chain technology: Comprehensive supply chain software solutions like e2open can provide companies with resilience and agility against demand volatility through advanced analytics and AI that provide early detection.
Future-Proofing Your Business
While going viral is comparable to winning the lottery and only occurs in a stroke of luck to a select few, the lessons learned from such scenarios are universally applicable. A robust, adaptable supply chain is essential for not only intense, random, sudden demand surges but also for everyday uncertainties of the modern business world. By fostering stronger relationships with supply chain partners, building long-term supply agility, and investing in extended strategies like scalable manufacturing, advanced forecasting tools, and diversified supplier networks, companies can position themselves for success.
The unpredictability of the market – whether driven by viral trends, natural disruptions, or sudden market shifts – requires a proactive, forward-thinking approach. Even if you never have a product go viral, a resilient and well-prepared supply chain ensures that your business is ready to deliver on customer expectations, maintain operational continuity, and thrive in the face of change.
If you’d like to learn more about how you can enhance your supply chain agility with stronger partner connections and turn your supply chain into a proactive engine for growth – contact us or explore e2open.com.
