MJBizMag July 2022 - 76

MJBizDaily Buyers Guide Extraction
mjbizdaily.com
MANAGING SUPPLY CHAIN ISSUES AND FLUCTUATING MARKET PRICES
The COVID-19 pandemic and the war in Ukraine have made sourcing some extraction materials
more difficult.
" There have been huge disruptions in supply since 2020, " notes Geisleman. " The pandemic and the
ongoing war put a strain on an already overburdened system. Our global supply chain was limping
along with multiple pinch points and lagging lead times, but all these issues were compounded and
became devasting during the past two years. "
She notes that maintaining a consistent production schedule and using multiple vendors can help
manage supply chain disruptions. Geisleman also advises holding more inventory to prepare for a
worst-case supply scenario.
" We are far from seeing the end of this situation by
all estimations, " she adds. " It is always difficult to
control operations costs when dealing with consumable
chemicals such as solvents. Pricing has always been a
challenge, but more so now with the scarcity and supply
chain disruptions. "
" Pricing has always
been a challenge, but
more so now with the
Geisleman also points out that not all extraction and
production companies have the luxury of holding on to
extra inventory, as some operators face storage limits
imposed by local regulatory authorities.
" There are numerous options to ensure you have ... the
stock you require when you require it, " she adds, such
as " nearshoring (the practice of transferring a business
operation to a nearby country), third-party warehousing, third-party procurement services and
blanket purchase orders with firm delivery dates. "
-Liz Geisleman
scarcity and supply chain
disruptions. "
Flippo of extraction and manufacturing firm Natvana also recommends stocking up on supplies.
" My primary advice is to strategically plan for these shortages, " Flippo says. " If you typically order
5,000 units per SKU (stock keeping unit), order 50,000 units. If you are financially restricted from
self-inventorying, speak with your suppliers and put orders in well ahead of time and work out
advantageous terms with your suppliers to aid in cash flow. "
Geisleman says changing prices are another factor to watch.
" All petroleum-derived solvents and pure ethanol have been very unstable in cost and availability
since the pandemic began, " she says. " Every indicator from the commodities market suggests this
trend will be with us for at least the next 12 months. "
Geisleman also points out that the reinstated IRS superfund excise tax will go into effect beginning
this month, meaning chemical importers and manufacturers will pay between 22 cents and $4.87 per
ton on certain chemical substances.
" This is not a huge increase for smaller producers, " she adds, " but (it) will impact a broad range of
chemicals used in this industry. "
16
Copyright 2022, MJBizDaily, a division of Emerald X, LLC. You may NOT copy this report, or make public the data and facts contained herein, in part or in whole.
For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call 720.213.5992 ext. 1.

http://www.mjbizdaily.com

MJBizMag July 2022

Table of Contents for the Digital Edition of MJBizMag July 2022