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Opinion: Best practices to minimize supply chain disruption

It’s no surprise the Springfield-area economy could be in for a wild ride the rest of 2020. When you factor economic uncertainty from the COVID-19 virus outbreak, unexpected supply chain delays from China, and the upcoming presidential election, it doesn’t take long to figure out that we all need to create well thought-out backup plans.

Companies of all sizes in the Ozarks will feel the pinch, but I suspect the greatest impact will be felt with small to midsize businesses.

In my line of work, I supply product labels to manufacturers that require aggressive lead times. No matter the size of the company, I often see the same pain points that relate directly to production time and materials usage.

Most typically, the issue is when a company uses just-in-time inventory methods; they can become too lean during supply chain disruption. Often, when supply chain is running at 100%, this is an excellent way to handle inventory operations and production timing. But when delivery times can’t be accurately tracked and layers of additional delays begin to add up, on-time delivery metrics begin to break down.

Here are several backup ideas to keep in mind when you’re up against delays from vendors, particularly for product labels.

Plan No. 1
Build up extra inventory in case your vendor experiences supply chain delays.
You would be surprised to know how many businesses I see that try to hold out. Whether they can’t afford to buy more inventory at that time or just don’t have the experience, it’s a common mistake.

What’s interesting is that the “Goldilocks” balance of how much to order is changing to a less lean inventory average since the recent supply chain disruption began. That means while every manufacturer watches customer demand and tries to determine forecasts and inventory flow, supply chain disruptions can cause manufacturers to decrease just-in-time orders and increase their overall inventory supply.

If you aren’t already allocating for additional warehouse space in temperature-controlled areas, your inventory costs can quickly sneak up on you.

Keep in mind that your product label is usually the face of your brand at point of sale, and depending on your industry, the label may need to follow strict regulatory compliant guidelines. So, properly storing your product labels to ensure readability is important.

Plan No. 2
Be prepared to switch to a different label if your supplier relies on imported materials.If your company is already running extremely lean, it’s never easy to allocate additional time to work on side projects until they become top priority. But if your production times continue to suffer delays due to lack of supply from China, one idea might be to immediately start testing other types of label materials that are readily available in the U.S. This may take additional time to get approval for companies that have a strong marketing brand.

If you’re a C-level executive and don’t have production experience, there’s an important factor to keep in mind. Switching to a new label material without properly testing and not considering how it will affect production time can backfire at the worst time.

Plan No. 3
Share your production calendar with your label supplier when possible.With so much automation in our lives today, it’s still important to have solid business relations. If you’re using a label company that only offers an automated online order process, you may have very limited resources available.

Understanding your customers’ typical seasonal demand each year and having a production schedule to share with your label account manager can help improve your long-term inventory operations. Keep in mind that label account managers usually know or have access to information about replacement materials that are best suited for your product’s surface and how the label is applied to your product.

What’s more, if your company is shifting to a different container or new lightweight packaging, the surface of the new packaging may require a different type of label adhesive in order to maintain its tact throughout your entire supply chain lifecycle. Any information you’re allowed to share with your label account manager will help them find the best alternative solutions.

Finally, sometimes businesses can experience unexpected inventory demand, especially when companies shift production to fewer plants or suddenly announce the acquisition of another company. And as most production managers know all too well, label shortages can greatly impact internal quality control and delay delivery times. Having a backup strategy in place to react to any supply chain disruption will help your label provider ship on time, so your production deadlines are met.

Think about how you can plan around potential supply chain disruptions and avoid production delays without taking on excessive risk.

Rob Freeman is the director of business development and marketing at Label Solutions Inc. in Marshfield. He can be reached at rfreeman@easylabeling.com.

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