DOES THIS STORY sound familiar?
“Business is crazy right now. We have more work coming in than we can handle. Everything is in short supply. And prices are all over the place. Almost every week another supplier announces a price increase. This week we expected to receive a product we ordered three weeks ago. Today, the supplier informed us it will take another two weeks. Our customers aren’t happy waiting five weeks for a product that was previously delivered in a matter of days. I’ve been stocking up on blanks when possible, hoping that I guessed right on what is needed for future projects. But it puts pressure on our cash flow. Even when we get the materials, we can’t get the people needed to produce all the orders that are coming in.”
Screen printing business owners facing similar struggles wonder: Why is this happening? How can we ease the pressure?
When mask mandates were first lifted, businesses eager to return to 2019 growth patterns ramped up faster than expected. The surge in demand affected every supply-chain link from the procurement of raw materials to the manufacturing and delivery of finished products. The challenges were complicated by pandemic-related disruptions in the availability of labor, delivery trucks, cargo ships, and manufactured products. Some supply chain issues won’t be fixed overnight. Screen printers may have to diplomatically reset customer expectations while researching and suggesting creative alternatives.
“Our supply-chain-management team has close relationships with suppliers and shipping partners to try to minimize shortages,” explains Jason Metnick, COO at S-One Holdings. (S-One’s global supply-chain network includes raw-material manufacturers, media coating and converting companies, and dozens of transit partners. S-One manages warehouses in Singapore, the Netherlands, Germany, the UK, Canada, and in five US locations.) “Before the COVID shutdowns, we stocked up and have ample supplies of materials our customers use most often.” Metnick believes many supply-chain issues are primarily related to problems with international shipping and ground transportation.
When ecommerce skyrocketed during the pandemic, so did the demand for package deliveries. But many truck drivers are aging out of the workforce and not enough younger drivers are being hired to replace them. Plus, ground shipments involving 400-plus miles take longer than in 2019 due to 2020 federal regulations that require all commercial trucks to use electronic logging devices. These devices enable safety agencies to enforce rules requiring long-haul drivers to take a 10-hour break after working a maximum of 11 hours a day. Drivers accustomed to taking a seven-hour break after a full day of work are fined for non-compliance. To cope with these changing conditions, FedEx and UPS suspended two-day guarantees.
Delays in shipments of products made in China and Europe can be attributed to the major consolidation of shipping companies that occurred in 2019. Demand for overseas shipments had fallen so much there was excess capacity, explains Metnick. “When shippers couldn’t make money, they started consolidating fleets.” Many ships were taken out of service.
Downsized maritime fleets didn’t matter so much during the COVID shutdowns when inkjet media manufacturers cut back on production. But transit troubles and labor shortages were noticed after businesses called furloughed employees back to work. Millions of employees chose to resign to either change careers, seek better jobs, start their own businesses, or go freelance. The extended unemployment benefits provided a financial cushion.
Some West Coast dock workers joined ecommerce fulfillment centers where they could earn more money and enjoy greater job security. This shortage of dock workers is creating delays and extra expenses for unloading shipments to the US. From an airplane over California, “I saw at least 200 container ships sitting in the Pacific Ocean off Long Beach,” said Metnick. “They were just waiting to come in port for unloading.”
Today’s screen printing supply-chain issues may not be resolved until Q2 of 2022 if the demand exceeds the supply for school openings, the holidays, and the 2022 Chinese New Year.
For now, investigate what blanks are available from distributors closest to your place of business. Learn about alternative materials you could use for the print jobs your shop produces most often.
Give customers incentives to place orders further in advance of each job. For example, announce temporary higher rates for quick turnarounds.
Longer term, learn how to use an ERP system with your print MIS and workflow automation system. Accurate ERP data can help monitor current inventory levels, track price changes, and assess the delivery records of each supplier.
To minimize the impact of cost increases, screen printers with bigger facilities can stock up on popular types of materials before announced price hikes take effect. Smaller shops with limited storage space should over-communicate with suppliers, says Metnick. A well-informed vendor can act as a business partner and suggest cost-saving solutions.
In their “Trend Report: Supply Chain Resilience,” Deloitte analysts suggest rethinking how your business selects and evaluate suppliers. Training employees in supply-chain management practices can also help. Employees should learn how to gather and analyze the right data to make good supply-chain decisions, monitor and mitigate risks, communicate effectively with supply-chain partners, and develop contingency plans.
Freelance journalist Eileen Fritsch covers printing business and technology.
Eileen Fritsch is a Cincinnati-area-based freelance writer who served as assistant editor of Screen Printing magazine in 1994 before being named a founding editor of Big Picture magazine.
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