IQBAR founder Will Nitze shares how taking control of your supply chain can increase profits, prevent stockouts, and transform your CPG brand, even during a crisis.
Before the pandemic, IQBAR, a protein bar company, relied on traditional contract manufacturers to handle everything from ingredient sourcing to production. As global supply chains collapsed in 2020, this model suddenly became an existential threat to the entire business. Founder Will Nitze knew he faced a make-it-or-break-it decision.
“We literally couldn’t make the product,” Will recalls. “We couldn’t get certain inputs, we couldn’t get cardboard.” The situation grew dire as logistics networks collapsed.
In response to these market forces, Will brought the entire supply chain in-house. This transformation saved the company, and set the foundation for IQBAR’s explosive growth. After transitioning the supply chain, IQBAR grew to $60 million in annual revenue between 2020 and 2024, moving 50 million protein bars in 2024 alone.
#1 Understanding the breaking point
IQBAR’s initial business model mirrored most CPG startups. The brand used what’s known as a “turn key” manufacturing approach, where contract manufacturers handle the entire production process. This included everything from sourcing ingredients, manufacturing finished goods, and billing the brand for completed products.
“It’s administratively not burdensome on you, the brand. It’s good for cash flow cause you didn’t have to outlay all the cash to get all those inputs,” Will explains. “It’s just quite seamless.”
The convenience of this manufacturing model hid serious vulnerabilities that came to light when COVID hit. Contract manufacturing’s hidden costs emerged in three critical areas: a lack of necessary ingredients, lower gross margins, and an inability to plan for long-term growth.
Also, when there were ingredient shortages, the contract manufacturers lacked motivation to find immediate solutions for IQBAR. “When you literally can’t find inputs, the person at your co-packer who’s managing your supply chain just isn’t gonna go the extra mile when supplier X, Y, Z tells them, ‘Sorry, we don’t have any supply,’” Will says.
Additionally, with this model, Will and his team had razor-thin margins, causing them to lose out on potential profits. “Your gross margin is somewhere between 3% to 5% lower than if you are actually sourcing all of your inputs,” he says. When you use this turn key model, manufacturers charge management fees and markup the raw ingredients to make even more of a profit.
Maybe most importantly, this middleman approach stunts long-term financial growth. “The co-packer is not gonna go back to each one of your suppliers and negotiate to reduce prices as your volume goes up,” Will says. Even if you start buying in much larger quantities, this means your profit margins won’t improve over time. That’s something you have the power to do when you’re in charge of manufacturing.
These issues brought Will dangerously close to what he calls “cardinal sin number one” for a CPG brand: running out of product. “Going out of stock—that is the death nail of any CPG brand,” Will says. He knew he couldn’t afford to let this happen.
#2 Making the decision to take control
Facing potential business collapse, Will chose to bring the supply chain in-house.
When asked how he prepared for the shift to bring the entire supply chain in-house, his answer reveals the reality of entrepreneurial decision-making in crisis: “It’s like anything in startups—there is no preparation.”
Will dove headfirst into sourcing relationships previously handled by the middle man, in this case, manufacturers. IQBAR now operates under a “co-manufacturing” model. The brand sources all raw materials from ingredient suppliers, manages those relationships, and coordinates deliveries to manufacturers who focus solely on production.
#3 Mapping the supply network
The first step in taking control of a CPG supply chain is mapping out your suppliers. For IQBAR, this meant identifying every component that went into its bars—not only the primary ingredients, but the packaging materials, processing aids, and the ingredients to make the ingredients.
Deep understanding of what goes into your product is the key to effectively managing its supply chain.
Will approaches this methodically, building on the product development work he’d done years earlier, “I opened an Excel spreadsheet and I said …, What are all the compounds that have been shown to be good for your brain in research? So, omega-3s, vitamin E, magnesium, etc.”
#4 Building direct relationships
Knowing what the ingredients and supplies are, the next phase involved getting in touch with suppliers. For this, Will used a straightforward approach: He identified contacts, reached out, and began building relationships.
For founders undertaking this transition, persistence is important. Many suppliers are accustomed to working with larger companies or through manufacturing intermediaries. Building credibility takes time and consistent follow-through.
#5 Creating clear systems for order projections
As Will deepens relationships with suppliers, he’s also created standardized procedures for ordering, tracking, and managing inventory. This supply chain infrastructure serves as the backbone of the in-house process, supporting its success.
“You do things for a couple months and you’re like, OK, generally this is my flow for how I order all the inputs,” Will shares. “And then you do that for years to come.”
When bringing supply chain management in-house, start simple and iterate. Will is constantly tracking optimal order quantities, establishing lead times, developing quality control procedures, and creating systems to track inventory changes.
He suggests other CPGs who want to follow his example start with basic tracking systems, and says even spreadsheets can work initially. Afterward, a brand can develop more sophisticated tools as order quantities increase.
#6 Taking control gradually
Taking control of the entire supply chain at once isn’t possible. IQBAR took a slow approach over time, beginning with its most problematic and strategically important inputs.
You can map out a phased approach that makes the most sense for your business. Start with your highest-volume ingredients, where margin improvements will have a real impact. Next, look at the components that have caused you the most headaches, as far as issues with suppliers.
#7 Leveraging volume for better terms
When tackling a decision with lots of variables we can fall pray to overthinking and not actually progressing to take action, instead we anxiously go back and forth and stress ourselves out! Here are some tips to help prevent this:
- Set a time limit to reach a decision by
- Break the decision down into smaller components
- Keep calm and focus
- Aim for a step in the right direction – think progress over perfection
- Seek guidance from trusted parties
- Have confidence in yourself
#8: Have contingency plans in place
A lot of the stress that we feel stems from the “what if…. ?” scenarios and not being prepared for them.
Contingency plans enable us to handle unexpected events by having well thought out strategies that allow for swift and effective responses. We can try to mitigate stressful situations by being prepared for them.
#9: Simplify your life
Choice overload makes decision-making hard. Get rid of what you don’t need and what doesn’t serve you.
Look at ways to simplify things and streamline processes to what really matters.
The less clutter (whether that be physical, mental or emotional) that you have in your life, the more clarity you will have in order to make better decisions.
#10: Plan ahead, take control
Prior Proper Planning Prevents Poor Performance – the old adage still holds true. Planning ahead will make future decision making much easier.
You can’t control what may happen, but when you are aware of your limits and have a sound sense of self awareness, you are better equiped to tackle life and make better decisions.
Reference
https://www.shopify.com/in/blog/iqbar-supply-chain-and-profitability-tips
