The time to find new rubber suppliers is now – before the holidays and additional uncertainty.
Are you a baseball fan? Then maybe you’re familiar with the saying, “wait ‘til next year”. It’s what fans say about a team that’s out of playoff contention, typically in September when there are still some games left to play. Then there’s the long winter between the World Series and Spring Training with the holidays in-between. Some underperforming franchises rebuild during the off-season while others stand pat or delay tough decisions. If you’re a manufacturer, there are some lessons to learn here. Don’t wait to rebuild your team and don’t keep doing what you’ve always done if it’s no longer working.
Strike Three
Maybe your company’s 2021 season hasn’t been what you wanted. Just like players get hurt in baseball, your suppliers may have succumbed to COVID-related disruptions. Baseball managers can’t win without their best players on the field, and manufacturing managers can’t make products without the materials that they need. At least baseball managers get a few weeks off at the end of a long season. If you’re in purchasing or operations, you could be facing some tough times between October and January.
Some experts predict that material shortages will worsen as the holidays approach and consumer spending rises. When consumer goods compete with industrial products for container space, shipping prices can spike. Earlier this month, container shipping rates from China to the United States passed the $20,000 mark. A year ago, the cost for a full container load was $4,000. Higher freight costs aren’t the only problem. Overseas shipments from East Asia to North America now take twice as long to arrive.
In baseball, teams that pride themselves on base running can’t expect to turn singles into doubles when injuries hobble once-speedy players. Teams with smaller payrolls usually can’t hang onto rookies who become superstars either. If you’ve been buying your rubber materials from Asia because the shipping was fast enough and the price seemed right, it’s time to accept that your “team” is changing. Just-in-time inventory may have been a winning strategy before COVID, but now it comes with liabilities.
Winning Strategies
Today’s winning companies are rethinking Lean Manufacturing’s emphasis on carrying limited inventory. They’re developing new partnerships that combine capacity with resiliency. Price is still important, but these manufacturers are calculating their total costs (including shipping) and focusing on value (such as on-time deliveries). They understand that supply chain disruptions may get worse before they get better, so they’re securing materials for the next six to eight months.
Yet, paying for large amounts of material up-front can consume significant amounts of cash. There are also costs and risks associated with in-house material storage. For example, keeping boxes of rubber coils at your facility could require buying new shelving and losing valuable floor space. But what if there was a way to buy all of the rubber that you need for next year while securing a volume discount and having your supplier worry about the warehousing?
When you do business with Elasto Proxy, you can issue a blanket purchase for all of the rubber that you’ll need for an extended period of time. We’ll buy the full amount, store it in one of North American or European warehouses, and release materials according to your sales forecasts. You won’t have to pay for products until we ship them to you, and it won’t take months for these shipments to arrive. We can even integrate your forecast into our materials planning resource system (MRP).
The Elasto Proxy Advantage
Are you ready to look ahead to the 2022 season? Don’t wait to rebuild your team until the holidays arrive and then pass. With help from the right partner, you can build a winning team. To get started, contact us.
