An effective supply chain process is key to any business’s success. It can lower a company’s overall costs and boost profitability. If one link breaks down, it will affect the rest of the chain and the business can have costly consequences. In today’s Timber Talks we want to tell you a special situation that we went through this week.
We had a phone call from one of our Fortune 1000 customers. They are in the food industry and they’ve experienced a disruption within their supply chain. One of their suppliers has not been able to provide them with a product that is specific to their packaging and liquid production and they can’t get them anywhere else.
As a responsible supplier we are always reading and keeping up with current events that may affect our industry. With that being said, there are currently 110 cargo ships off the west coast. There is a chance the stall of these ships is directly affecting their delivery. However, there aren’t any timelines provided to move these loaded cargo ships which creates a huge amount of uncertainty.
So, what are the effects of this issue?
Scenarios like the one mentioned above significantly disrupt our client’s supply chain cycle and business. Although their facility is over 200,000 square feet, they will not have the additional capacity to make this product at the amount that they normally would for the next two months, affecting a huge portion of their yearly revenue.
Timber Industries, LLC is their pallet provider, they use our pallets to store and distribute the mentioned product they cannot package. For this reason, they had to move some of our orders back. Fortunately for us, it frees up our availability, and we are in the position to move the surplus of inventory to other customers who are able to fire on all cylinders at this moment. These volumes can fluctuate and unexpected events can happen but we are prepared to solve these issues when they arrive.
Adding to the whole situation, they also have labor shortages right now, this is a huge issue that is affecting most industries since Covid-19 started. We talked about it on last week’s Timber Talks. If you want to check it out, go to Factors That Have Affected The Lumber And Pallet Industry to read all about it.
Lastly, the product’s price increases due to the high demand and very limited availability of all the products, coming to a full cycle of the supply chain. Products can’t be manufactured because of raw material shortage and they can’t be distributed on pallets so the final product doesn’t end up on the shelves. This limited availability leads to high prices for the end-consumer.
When one link of the supply chain disrupts the cycle, it breaks all of the integration between production, distribution, and consumption. The solution? Be prepared and try to be ahead of the curve, make sure to have reliable suppliers with enough capacity to get your full load, and hire a team that helps to ease the pains that can occur in your industry.
We want to know your opinion, what would you have done in this situation?