- November 17, 2021
- Posted by: David Marshall
- Category: Business, Management
There are shortages and inflation throughout the country, thanks to a number of supply chain issues. Container ships are stacked up outside different west coast ports, there are labor shortages to unload and reload container ships, and there are shortages of labor to make parts and goods here in the United States.
But all is not lost. There are still some ways you can continue to fill orders for your customers, depending on the kinds of products you make and where you source your materials.
If I needed to fix my supply chain right now, these are the things I would do.
First, I would have started the whole process a year ago, if not longer, by increasing my prices every 30 – 60 days to slow down the number of orders I was taking. (That doesn’t mean it’s not an option now; it’s still a good choice, it’s just something you should do earlier rather than later.) I would make the same amount of money, but it would reduce the number of parts or amount of raw material I needed. That would help reduce my own materials shortage because I would be buying fewer items.
Another reason to do this is that I would have been seeing higher buying costs on my end as well. I would have been raising prices on my customers because my suppliers would be raising prices on me. In other words, a container from China that used to cost $2500 would now cost $7500. So it’s better to be ahead of the wave in slowing down orders — doing it before your own costs go up so you won’t negatively impact your profitability.
Secondly, I would start sourcing materials from everywhere in the world. Right now, the big suppliers are in China, Taiwan, and Vietnam. And all the ports that have cargo ships in holding patterns are on the west coast. So I would start looking at suppliers in Brazil, Argentina, Africa, Poland, and other Eastern European countries. These countries would deliver to the ports on the East Coast and Gulf Coast — Miami, Jacksonville, Baltimore, Houston, New Orleans, and so on — which aren’t overflowing now.
Third, I would buy 3D printing machines for short-run products. If you make steel products, you can get a steel 3D printer and hire the personnel to help you run it. Then you can start running those small projects to keep your cash flow running.
Of course, this is another reason why you need to raise your prices: so you can afford the 3D printer.
One thing I would not do is to buy a supplier, or at least I would be very circumspect in doing so. That’s because a lot of people have been doing a lot of acquisitions since the market is fairly volatile. Companies are failing, so buyers are getting them on the cheap.
The problem is, a lot of people are going through post-acquisition pain because the projects aren’t coming through. Companies bought other companies at a high price, expecting the pre-pandemic, pre-broken supply chain performance, and it’s not happening for them.
Instead, they’re just watching their investments just fade away.
Bottom line: Find alternate suppliers wherever you can and have everything shipped to the East Coast. Buy your own printers and start producing your own small runs. And, most of all, be sure to raise your price to cover your own cost increases and to help lower the number of orders while still maintaining profitability.
I’ve been a manufacturing executive, as well as a sales and marketing professional, for a few decades. Now I help companies turn around their own business, including pivoting within their industry. If you would like more information, please visit my website and connect with me on Twitter, Facebook, or LinkedIn.
Photo credit: Michoff (Pixabay, Creative Commons 0)