Learn Keys for Keeping on Track Despite Supply Issues
Due to a variety of factors, supply chain challenges have dramatically increased for production facilities and manufacturers across the entire world. With seemingly every industry struggling to find what they need to keep production flowing, and supply chains already straining against breaking points, short-term goals for many during the remainder of 2021 will center around acquiring the parts and materials needed to make your business work.
Before we delve into the supply chain challenges specific to the packaging and labeling industry, it’s important to note that the current stresses won’t simply evaporate quickly. These are persistent pressures, built up over the better part of the last 18 months, and the challenges faced now are anticipated to dominate the near future. For manufacturers struggling to acquire the needed materials, it’s essential to be proactive, develop strategies to mitigate the issues and collaborate with trusted suppliers and partners who could provide alternative solutions. Decisive actions now may improve some Q3 2021 supply issues, but the real benefits will likely be seen further down the road — in Q4 or Q1 2022.
Now, let’s look into some of the causes of the current supply chain challenges and what your organization can do in response.
Supply Chain Challenges from Every Angle
The single biggest factor negatively impacting the supply chain is the same one that has been prevalent for most of the last year and a half. The pandemic, in early 2020, led to the temporary slow down of many facilities or the shuttering of production lines. But, demand for many products and related services remained steady or increased. That gap has led to a lag between supply and demand that has been difficult to erase. There’s a backlog for many materials and parts, production lines are full, and any further delay or disruption is magnified further.
And COVID-19 issues remain a consistent obstacle in shutdowns, slowdowns, and further breaks in the chain in various parts of the world. For instance, persistent outbreaks in India have taken a major liner producer offline. Without the regular supply of liners, label manufacturers and packaging solution providers have struggled to find additional suppliers — which in turn leads to delays and shortages for businesses that need those labels and packaging options for their own goods.
Other material shortages, beyond liners, have been problematic for label and packaging manufacturing companies. In an obvious example, the February storms that ravaged Texas and the Gulf Coast resulted in critical supply shortages for many poly-related products. Among the vectors dramatically impacted was the production of various adhesives. Without adhesives, the options for many label products become limited or non-existent. Such disruptions interrupted, completely, an already strained supply chain and exacerbated the delays for fabricators, suppliers, and manufacturers of all related products.
As production, across the globe, labors to catch up with demand while negotiating with the impacts of pandemic regulations and delays — and material shortages — it’s been slowed by the logistical issues common across many sectors. Shipping ports are full and/or overwhelmed. Backlogs of orders sit, waiting to be processed through customs. Warehouses are empty due to bottlenecks at other points in the supply chain.
And increased demand and/or competition have made procurement of needed materials even more challenging in the label manufacturing realm. With previous lockdown orders and work-for-home adjustments, many consumers leaned into online ordering or eCommerce — which is fighting for many of those same liners, stock, and adhesive materials that label and packaging manufacturers are searching for. The influx of delivery, or take-out, food orders meant a dramatic increase in the need for bag-sealing stickers — and the label adhesive needed for them.
All of these events and factors have led to supply shortages on two fronts: both in the procurement of raw materials and in the capability to produce and ship them. It’s affected vendors and manufacturers in obvious and negative ways, as lead times have risen exponentially due to these supply chain challenges. A replacement order for label liners might have been filled in two or three days before. Now, it’s 2-3 weeks. A two-week wait for a specific formulation might have been 10 days; now it’s more than a month. And with logistical issues in shipping, the regularity of replacement shipments isn’t as reliable as before with multiple-week pushbacks now a common occurrence.
And lining up new suppliers is difficult, as many of those who are still shipping liners, stock, and adhesive are not taking on new customers as their own capabilities are already stretched to the limit.
How to Prepare to Meet Supply Chain Challenges
Unpredictability has been the most defining trait of managing supply chain challenges for most of the last two years. However, with communication and services from a trusted supplier — such as The Kennedy Group — you can provide some mitigation against the unexpected. Here are some options available to add more resiliency to your supply operations.
Prior to the pandemic, many organizations opted for lean supply chain operations — giving up resilience and flexibility for efficiency. One way this was manifested was by ordering only what was absolutely necessary as close as possible to when it is needed. Now many are re-examining that choice. Finding ways to generate safety stock is now seen as a beneficial strategy, and one way to do so is working with suppliers with blanket orders.
Blanket orders are usually developed with consistent, repeat customers that have a good working history with a supplier or vendor. They typically come with predefined ship dates and allow both parties to better schedule what parts will be needed and when to send them. The thinking is simple and efficient. Authorize the ability to order large amounts of a resource when it becomes available. This resource (parts, material, etc.) is then parsed out as needed over the upcoming months. This will smooth out gaps in supply and give customers some needed consistency.
Similar in concept to blanket orders, future orders instead trade out a large upfront cost — for a large quantity of a material or stock — for authorization of orders many months in advance. Instead of ordering a massive amount in one go, you’ll be setting up regular, consistent orders for what you need over a much longer scheduled period of time.
This helps the customer in knowing their orders are already set up and will be given priority when supplies become available. For their manufacturing or vendor partner, it simplifies the process of procurement as well. When supply is located, it expedites the process of allocating that material (or part) to a specific client.
Whenever possible, The Kennedy Group will work to find another supplier to suit your needs — be it for film, adhesive, stock, or liners. But given the current constraints in place, finding specific replacement compositions for materials (like adhesive) can be a challenge. That’s why it’s essential to have open and honest communication with facilitators and manufacturers. A good partner can help you identify potential alternatives and help you make the most of what’s available.
Communication, agility, flexibility — to adjust to changing circumstances — will offer up some potential solutions. A good supplier will have knowledge of how you can perhaps repurpose other stock to fulfill obligations. They’ll help you rearrange orders for priority based on their expertise in the processes involved. Even in the case of damaged shipments, good collaboration can identify ways to salvage portions to address areas of need.
Let The Kennedy Group Help Solve Supply Issues
With nearly 50 years of providing innovative solutions to packaging and labeling needs, we’ve honed our ability to adapt and adjust as the situation dictates. This is a vital strength in the current supply chain environment where delays, pushbacks, and shortages are major issues for nearly every industry.
We’ve continued to provide a wide range of high-quality labels despite the challenges, and even improved other capabilities. In addition, our material handling identification label products are essential now more than ever with the need for every company to account for every crate and pallet.
With supply chain challenges promoting unpredictability, rely on us to provide some much-needed stability, dependability, and collaboration to find solutions. Contact The Kennedy Group today to discuss some of these options and view a full menu of our capabilities.