With supply chain problems plaguing manufacturers from coast to coast, one Burbank business owner wants to get around it by sourcing his materials locally.
Brian Hollowaty is chief executive of Los Angeles Brands, a beauty and hair care manufacturer. Two years ago, seeing where things were going in terms of supply chain with higher costs and tariffs instituted by the government on products coming from China, Hollowaty began to source his supplies locally. His warehouse is blocks away from his manufacturer of bottles and other containers for his products.
Staying hyper-local with suppliers allows the company to reduce its carbon footprint and remain flexible when it comes to fulfilling orders, Hollowaty said.
“If we have a retailer come to us tomorrow and ask for a 300,000-piece run, we can be very flexible and get it into their hands in five to six weeks,” he added. “That would be unheard of if our supply chain was global.”
The supply chain issues have resulted in backed up container ships waiting at Los Angeles and Long Beach ports, the nation’s busiest container gateway; products coming from overseas delayed in getting off the ships and out of warehouses due to lack of drivers; and eventually empty store shelves.
Currently, Hollowaty estimates that between 5 and10 percent of the components used in his products are sourced from overseas but sold to him by local vendors. These components include shampoo, hand wash and lotion pumps and also bulb droppers for facial oils and beard oils, he said.
“Some of those components are not readily available in the U.S., to be honest,” he added. “That is a limitation with U.S. manufacturers right now.”
Bill Wappler, a supply chain expert, compared a supply chain to a dance between manufacturers and suppliers. When a process so intricate gets impacted by outside forces, such as COVID-19, changes in buying patterns, governmental policy and even holiday shopping, then something has to give.
“We are dealing with a confluence of a lot of problems that have come together at one time, and it is big enough that it will take quite some time to break up the logjam,” said Wappler, chief executive of Surgere, an Ohio company leveraging Internet-of-Things (IoT) technology to revolutionize the supply chain.
Wappler said he used to tell people that by the middle of next year the supply chain problems would begin to loosen up. But now, he is not so sure.
As he talks more and more with some of his clients, including Toyota Motor Corp., Honda Motor Co. Ltd. and Mazda Motor Corp. and other large companies with extensive supply chains, he’s found himself stretching his timetable.
“I believe it is going to be the third quarter of next year before we start see some fluidity and velocity come back into the supply chains,” Wappler said.
Los Angeles Brands was founded in 2017 by Hollowaty. Prior to that he was vice president of sales for MaCher USA, a Venice designer and manufacturer of sustainable products for travel, beauty and apparel brands, among others.
Making the switch to locally source his components for the bath, haircare and personal and pet grooming products the company makes involved a lot of meetings, a lot of research and a lot of word-of-mouth referrals from people in the industry, he said.
The company starts with the supply chain, Hollowaty said, not something a lot of manufacturers do. Most companies focus on creating a great product and then worry about how to make it.
As an industrial engineer by training, supply chain is very important to him, he said.
“It gives you the guardrails and then you can be creative within those guardrails,” Hollowaty added.
Los Angeles Brands makes 70 different products across seven brands, all developed and owned by the company. The brands include Maya Mari Haircare, Abbott Kinney Apothecary, Clean Standard and Frankie and Paisley pet products.
Vendors he used in the past from overseas still contact him nearly every day asking how his business is doing and when they would get an order.
“I am keeping communications because they are great vendors, but market conditions do not allow me to do much with them right now,” Hollowaty said. “I am transparent about that; I have nothing to hide.”
Arpy Simonian is the owner of Arpine Media Group, a Burbank business offering print and promotional products. Since 2019, she has provided the labels for the Los Angeles Brands bottled products.
She said she was introduced to Hollowaty through a sales rep at the business that fills the company’s bottles.
Hollowaty was looking for someone more hands on who could help with the company’s label needs, as well as having a good relationship with the fulfillment business that fills the bottles, Simonian said.
“I had a quicker lead time than where they were originally going with, and my quality was far superior,” she added. “So, they made the switch.”
Los Angeles Brands is sold through major retailers such as Nordstrom Inc. and Marmaxx Group, the owners of Marshalls and T.J. Maxx stores, which in turn is owned by TJX Companies Inc., as well as at independent boutiques, of which there are thousands in the U.S. alone, Hollowaty said.
“We sell through distributors to those boutiques. Those could be independent beauty stores; it could be small mom-and-pop type shops. Because we are local, we are very focused on shopping local and really telling that story,” Hollowaty said.
The company also sells its products through Amazon.com Inc. and the Los Angeles Brands website, he added.
The company is also in talks with all the major pet retailers about adding the Frankie and Paisley line of products. This month, the company added a new product, Fanny Foam, which removes dirt, debris and dingleberries (fecal matter stuck to the fur) from the coats of non-shedding dogs.
When asked if the strategy used by Los Angeles Brands could work for everybody, Wappler said yes and no.
He explained the theory of Industry 4.0, which came from Europe. “This theory is saying that economies are going to become more local and that means supply chains are going to become much closer,” Wappler said. The theory sprang from geopolitical economics that are happening now, population growth in large urban settings and density of population, he added.
Part of the theory focuses on technology, such as IoT to share data, reduce supply chain entanglement and become transparent and visible. But it also means that it will be like a return to the old days when there was a central business surrounded by its suppliers, also known as vertical integration.
That means more people are going to be looking at their supply chains and moving to localized sourcing, Wappler said.
“I espouse that theory. I am seeing it happen. I believe in it,” he noted. “What your local company is doing is not only appropriate to their current situation, and they may not know it, but it is a little bit of an eye to the future, too.”
Hollowaty is aware of that, and said the company was “tripling down” on local manufacturing and suppliers because of it.
“We feel that is the future, and that the future is local,” he said.