Persistent supply difficulties make acrobats of business owners

Since the beginning of this year, increased prices and lead times of raw materials have been a major business concern to manufacturers. These occurrences are not only affecting the steel, kraft paper and polymer used to make many of our products. They have affected the supply chains of almost all industries and have been happening across the world, for a whole host of reasons. While we had all hoped that some of the root causes of the global difficulties would resolve themselves within the year, the problems are showing no sign of abating at the moment.

Over the last year, it has been increasingly tricky to maintain a normal supply of raw materials. As producers and distributors, we’ve had to be constantly on our toes, vigilant of the smallest fluctuations which might indicate bigger issues that could affect our customers, thereby mitigating risks coming from many different directions on a weekly basis. You could say that we’ve been forced to become acrobats of sorts, in recent times!

The COVID-19 pandemic caused labour shortages and stoppages in almost all areas of production globally – from timber to plastic goods – leading to raw material shortages across most industries, which just do not seem to be righting themselves as quickly as we had all hoped.

Furthermore, disruption of reliable supply lines as a result of lockdown measures; the staggered and volatile recoveries by country and by region; and extreme weather in numerous regions; have been further causes of difficulty in obtaining raw materials as usual over the last 12 months. All this has resulted in the cost of shipping increasing in a radical manner, the like of which Industrial Packaging has never before experienced, over the three generations of our business.

While we feel lucky not to have seen tenfold increases – which has been the case along some global transport routes, as reported by ICIS – costs have been steadily going up and up over the last year. These increased transport costs and delivery lead times have affected our supply chain – like that of so many other manufacturers – since the pandemic recovery phase began.

As well as raw material and transport costs rising, there are many other factors currently affecting the supply of goods. These include incidents such as the Suez Canal blockage, an ongoing shortage of HGV drivers, and quarantine and closures at ports on resurgent coronavirus infections.

A cargo ship passing a red lighthouse at the entrance to Dublin port

These issues have coincided with spikes in consumer demand for many types of final products, as the COVID-19 pandemic kept people at home, whipping up unforeseen demand across economies around the world. This was further reinforced by fiscal stimulus in many countries. And now, rising inflation will exacerbate concerns for many businesses…

All of these factors coming together in one year have created what some economists and business journalists have referred to as “a perfect storm”.

We have donned our oilskins and kept the binoculars around our necks at all times this year, confident that if we make good decisions at the right times, we will be able to protect our business, our employees and, of course, our customers.

Every week we are working hard to protect availability and lead times for our customers, to reduce supply uncertainty for them. We have managed this to date by various strategies, including avoiding buying from and transporting via the UK, sidestepping many Brexit-related delays (which also avoided having to absorb or pass on customs clearance costs that have arisen since the UK left the EU); increasing our re-order points and stock holdings; and sourcing alternative materials. We continue to try to think ahead and think smart, to protect our customers. As a small company, we are grateful for the ability to be more agile and reactive than larger companies in this regard.

We will continue to communicate with our customers to minimise disruption to their supply chains, during this very strained time for all manufacturers.

While we are always grateful for the opportunity to learn new skills and keep alert (!), we hope for simpler times ahead for us all.