How does the global supply chain crisis affect your packaging business?
A company’s supply chain consists of many moving parts which can be offset by external factors such as geopolitical issues or shipping and logistics. In 2021, a global supply chain crisis culminated and according to experts, supply chains were already being disrupted long before the COVID-19 pandemic began. The crisis has impacted businesses, causing delays and price increases. This could have been a result of an over-reliance on Asia and foreign production and now manufacturers are reconsidering their processes so that they can better manage logistics. What’s the best way to navigate the current situation and forecast future blockages and challenges? Read on to take a deeper dive and learn how you can mitigate the effects of supply chain issues for your business’s success.
Is sustainability the holy grail of supply chain risk management?
During the pandemic, manufacturers were struggling to find a solution to delays, port congestion, rising transportation costs and other strains as a result of lockdown regulations and public health rules. One weakness that most companies faced was that their supply chains were heavily outsourced and dependent on networks. In order to increase resilience and alleviate these issues, manufacturers began leaning toward regional supply chain models. Apart from the challenges that the pandemic posed, manufacturers have also been facing challenges due to an unstable political arena. While China still holds the cards for global supply chains, US-China trade tensions have been worsening. Along with this, the Ukraine conflict has also impacted global logistics and drastically increased energy prices, having a domino effect on the packaging manufacturing industry.
In a bid to absorb the impact of these tensions, brands are opting for close manufacturing proximity. This enables them to provide quicker delivery and service for their consumers, which gives them a competitive edge. Converting to regional processes also means that companies can improve their sustainability and reduce their carbon footprint. Sustainable approaches are especially needed in the packaging industry where 28.1% of total waste production comes from packaging waste, according to the US Environmental Protection Agency (EPA). GPA Global has regional manufacturing plants which help reduce their client’s business reliance on foreign resources. Five years ago, GPA Global’s manufacturing was reliant on Asia with 95% of it taking place there. They have reduced that figure to 70% now to offer their clients more optimal solutions that are closer to home. By removing foreign links, the supply chain can be more resilient as you cannot always control external factors but you can manage their impacts. Creating a sustainable packaging supply chain can also reduce costs, for example, trade tariffs and freight costs. This allows companies to allocate more funds to improve their processes.
The pandemic opened more challenges for manufacturers and drove the crisis further, with some industries facing significant logistics disruptions and congestion. Statistics show that 38.8% of small businesses in the US alone experienced supply chain delays due to the pandemic. These companies faced further challenges as 51% of consumers demand faster supply response times. New risks may continue to cause bottlenecks in manufacturing supply chains with pockets of stress but a good way to mitigate these is to forecast and prepare in advance. Taking a sustainable approach can help improve resiliency and absorb the impacts of geopolitical tensions, while having a positive impact on the environment.
How can you increase your packaging supply chain resilience?
As sustainability moves from innovative models to becoming more conventional, more brands and companies will realize its potential and benefits, not just because it reduces their carbon footprint, but also as it can improve resiliency. Finding a way out of supply shortages is a challenge. While some companies may increase their capacity of production or limit their demand, these options may not be ideal. The availability of resources and materials will impact the success of increasing capacity. For example, due to the disruptions and rising costs of nickel, copper, aluminum and steel, car production assumptions are set to drop from +4% to -1% for the fiscal year of 2022. Little or no energy supply from Russia also directly impacts companies as energy prices have spiked, resulting in lower production rates.
A step towards sustainability can help reduce lead times and the enormous strain on operations. This is because company leaders can better navigate concerns like transportation capacity and higher fuel costs. Finding a packaging manufacturer that understands your business needs and can offer you an optimal solution that improves the resilience of your supply chain will see your business through a multitude of challenges. For example, GPA Global is committed to taking the stresses of logistics away from you, especially in the current climate. They use cutting-edge technology and automation to ensure that your products are produced in the most efficient way and reach their destination in the quickest and safest way possible. Choosing a packaging manufacturer like GPA Global will also help you reduce your carbon footprint, of which 80% of emissions come from your business’s supply chain. They also have global warehouses to ensure that your product will never be far from home.
Material availability is a major contributor to the resilience of a supply chain. It affects procurement and logistical strategies. Packaging may be affected by price, availability and environmental factors so being prepared with innovative operations can help you gain the opportunity to tailor your supply chain solutions. This will enable you to forecast and navigate potential bottlenecks in your supply chain.