The global supply chain mess caused when the world economy re-opened continues to affect delivery of products to market. While everyone hoped that the holidays this year would be back to normal, they clearly are not. There were shortages of turkeys, flour and other ingredients. And, when these items become available, the prices are higher than they have been in years. A hidden shortage of containers, ships, trucks and the system of logistics continue to complicate matters. While the product consumers may want could well be available, packaging materials to get the items to stores are also affected.
Take, for example, aluminum and polyethylene, two important raw materials for high barrier flexible packaging. Aluminum is a metal used in so many industries that the demand is now higher than the supply for many markets. For example, the aluminum beverage can used in everything from canned vegetables to beer is in short supply. Some breweries have taken to slowing their production lines in order not to have to shut them down due to the lack of aluminum cans. Flexible packaging converters have had the same issues, searching for enough aluminum and other raw materials in order to fill customer orders. Polyethylene resin producers are still reeling from the devastating winter storms of last winter.
Damaged infrastructure and buildings, along with COVID-19-related absences have all contributed to the short supply of polyethylene and related resins that produce other types of films used in packaging. The reasons for the bottlenecks are many, including the impact of the Coronavirus disease (COIVD-19) on production, the labor shortage, geo-political restrictions to trade, new climate change regulations, logistic shortages of truckers, dock space for cargo ships and shipping containers, just to name a few. When will the supply chain normalize? As it stands, it is anyone’s guess. The cargo bottlenecks at the ports have to subside and truckers need to clear the terminals before we can begin to see some normalized movement of materials and products. Many experts in the affected industries have said the problems will continue into the middle of 2022 and beyond.
What can be done
Business leaders have focused on just-in-time supply chains, and that approach has put a lot of companies as a disadvantage. For the companies able to increase their raw material inventories, knowing demand for their product was going to rise, they were in a better position to fulfill customer orders. It is better to have too much and pay warehousing costs than it is to have too little and not make sales as a result.
If you communicate with suppliers and customers about deliveries, deadlines and delays, you will have the information needed to be nimble in resolving any problems. It will not prevent things going wrong every now and then, but it will allow you to fix them more easily when they do.
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Related to that is the need to engage with logistics and custom brokers. These people are the experts in moving raw materials and finished goods to the store shelves. Their knowledge and connections can be the difference between success and failure these days.
If you have raw materials or products coming from China, you have a bigger problem than if these materials or products are coming from a place just down the road. Quite simply, less can go wrong. It’s called “re-sourcing your resources.”
Efficiency is another hidden tool. Getting more out of what you have means you do not need as much from sources that may or may not be dependable. And, when the supply issues are resolved, you have a more efficient operation for future profits.
For years, businesses have talked about being disruptors of the established order and of seizing the advantages that come from that. Now, we have been disrupted. The supply chain tangles are just the most obvious sign of that. Rather than being the drivers of change, we have had change thrust upon us. We all hate it when we lose control over operations. But, things are just as disrupted as if we deliberately set out to do this, and the potential for success is just as real if we can keep our heads.