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Supply Chain Visibility: Production and Raw Materials

by Mike Brown VP, Business Development

May 17, 2021

Limited supply, delayed deliveries, short shipments, and price increases will have a negative impact on customer perception despite their increased awareness of the global economy – which is bringing the attention from and centre onto Supply Chain Visibility.  For retailers today, understanding where the pain points originate and how they interconnect will help to mitigate issues and provide the basis for better understanding at all levels within their company. Think about how to take the details from a deep dive and build an “elevator speech” that can be understood and referenced as needed. Ultimately, this will also lead to better communication and updates for the consumer.

Common threads across most recent disruptions: lack of people to do the work and gaps between supply and demand.

What else is happening and is there a ripple effect?  See below list of some products and raw materials facing current challenges.

Microchips

This is mostly an issue of supply and demand within a complex supply chain. Increased demand for home gadgets, home office products, and increasing technology in automobiles is not likely going to change any time soon. In the short term, this could mean more delays, extended lead times, inventory hoarding, and fewer manufacturers. In the long term, it could lead to increased domestic production and future availability.  Do you have a backup plan?

Lumber

A multitude of factors, but predominantly affected by extreme supply and demand gaps. DIY trends, home building, and renovations have been heightened by the pandemic. Short-term workforce constraints have contributed to the lack of availability (and hence price inflation) but the lower rate of North American lumber production due to other factors is a more long-term concern. Climate change, wildfires, and bark-eating beetles are serious issues. Will this have a ripple effect on say power tools and hardware?

Copper

This availability risk is a worldwide issue. Since copper is an electrical conduit, it is in increasingly high demand for products such as electric vehicles. Watch for increased pressure on this commodity with the new proposed US  infrastructure plan. Alternative sourcing through scrap recycling could also be at risk. Do you have alternative options? Steel and Aluminum should also be on the watch list, although they have not had the same critical impact that copper has.

Plastics

With green initiatives and a trending focus on reducing single-use plastics, it seems counterintuitive to think that the demand for plastics is increasing. The need is coming from food packaging, DIY, and PPE (personal protective equipment). The shortages in the market are largely due to manufacturing disruption caused by hurricanes and winter storms in the Southern US. Where are your plastics sourced?

Apparel

Sourcing output in most South and East Asian countries has declined at the same time as demand for the product has been extremely low. This is one business that has had the opposite disparity in supply/demand on a macro level, leaving behind canceled orders affecting garment makers as well as producers of textile, yarn, and accessories. In addition, there have been great shifts in consumer shopping patterns and preferences. Are your makers financially stable?

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