Trending Content

Working With a Broken Chain

By AICC Staff

January 24, 2022

Due to the far-reaching and ongoing impact of COVID-19, 2021 was the year of the broken global supply chain.

“For decades, we’ve had this beautiful supply chain flow making it possible to practice just-in-time forecasting with our clients and fulfillment that can land products within hours of when they get used in a facility,” says Greg Tucker, owner and CEO of Bay Cities. “That’s all thrown out the window now. Paper shortages have led to extended lead times, late deliveries, missed deliveries. This is running rampant with Bay Cities, and I’m certain it’s running rampant with all of our independent brethren due to capacity constraints, paper shortages, and supply chain .”

“At Wasatch Container, we work with corrugated, foam, and wood, all of which have had supply over the past year,” notes Jerry Frisch, founder and president. “The result was tight allocation, which allowed us to receive only about half the raw material supply that we used the previous year.”

Lead times that would have been a week or two back in 2019 have stretched out to six weeks. At the same time, Frisch points out, the corrugated business has been even busier than usual, which has put additional strain on an already disrupted infrastructure.

Proactive Partnerships

Managing the supplier-manufacturer relationship is vital for a boxmaker’s success. Yet the current shortages have led some manufacturers to panic, scrambling for new suppliers in an attempt to get back to “business as usual” as quickly as possible.

Kevin Ausburn, Chair and CEO of SMC Packaging, believes that approach may be short-sighted. “There have been instances over the years where we could probably have sourced things differently,” he acknowledges, “but there’s real value associated with having dedicated, loyal suppliers with you in times like we’re in right now.”

Ausburn points out that SMC’s longstanding supplier relationships—partnerships stretching back more than 20 years—mean they know how the company operates and what they need. For instance, even though the company has been affected by shortages like everyone else, Ausburn credits their supplier relationships for the company’s ability to maintain a certain level of inventory on the floor. Although the situation is not perfect, he says, “We’re probably at about 75% of where we would like to be with the inventory on the floor.” There have been very few instances in which the company has completely run out of a grade.

width=174

Kevin Ausburn, Chair and CEO, SMC Packaging

SMC’s situation highlights the importance of nurturing supplier relationships just as they manage their customer accounts, Ausburn believes. “I think sometimes that gets lost in the day-to-day activity. One point that has come out of these shortages, and everything associated with COVID-19, is how important it is that we take care of our suppliers. In times like this, our suppliers are going to want to deal with the people who pay their bills promptly, who place their orders with sufficient time, who are easy to work with and aren’t overly demanding.”

In addition, Tucker says, “You have to communicate. Go beyond email. Pick up the damn phone and call whoever you need to call, so you can make sure that something is or is not happening. You have to have that direct conversation with people, that constant communication, so you understand whether what you’re doing is actually working.”

Without frequent communication, parties can fall into assumptions that may not be accurate. “I think the times that we’ve gotten a little pinched on supplies are probably because we’ve taken for granted some of the order patterns that we have with the mills,” Ausburn points out. “We assume something is happening on their end and then discover there’s been a miscommunication somewhere along the line, or there’s a new customer service person at the mill who doesn’t quite understand what our needs are. Next thing you know, we’re completely out of a grade, and it’s going to be another week before they get in and run that. So we’re trying to do a better job of communicating with the mills on a regular basis. We’ve got scheduled phone calls throughout the week where we send information on what we show on the floor, what we have on order, and what we’re expecting—making sure the mills are producing what we need when we need it.”

The Waiting Game

Supply chain failures have affected boxmaking equipment production—and repair—as well, weakening boxmakers’ ability to deliver their own products on time and on budget.

“There’s a steel shortage,” Tucker says, “but there are also other shortages across the board: It’s copper, wiring, electronics. All of the electronics that are going into the corrugated boxmaking equipment set require microchips. Well, you can’t get them. And then there’s the whole people issue; we can’t get wiring harnesses because manufacturers can’t get people to weld them. We can’t get people to assemble these machines.”

The result: Bay Cities is experiencing delays on four major pieces of equipment. “One was supposed to be in this past summer; we may see that at the beginning of this year. One was supposed to be in at the end of 2021; I don’t think we’ll see that until August,” Tucker says.

Although SMC did not have any big equipment orders in 2021, the company is looking ahead to possible equipment purchases this year. “Normally, we would expect fulfillment within six to nine months or so,” Ausburn says. “We’re hearing from manufacturers that their lead times have stretched out a lot longer. Now, it’s more like 12 to

18 months.”

“It seems like every supplier is saying orders won’t be filled for 12 to 18 months,” adds Frisch, “with one supplier being out over two years. I think all the machine suppliers are selling more units now than ever, but there are just a lot of disruptions in the supply chain.”

All About Communication

With across-the-board interruptions at almost every point in the production and fulfillment process, boxmakers are finding it virtually impossible to deliver the level of service they and their customers have come to expect.

“We simply aren’t doing a great job right now when it comes to delivering customer service,” Tucker says. “I don’t think anyone is. But rather than just accept that, I think we can stand out by working to communicate better and better. Because of the current situation, our outward marketing really has to be more toward returning to ultimate customer service.”

width=145

Greg Tucker, owner and CEO, Bay Cities

The key, he says, is communication. “Communication is the big C word that can make a huge difference. That’s what’s going to set the independent apart from the larger companies that are just swamped and trying to get their heads above water. Yes, we’re trying to get our head above water, too—but let’s do it smarter, with the customer in mind. It’s the most valuable thing we can do for the future.”

“There have been points—particularly this past September—when our lead times have stretched out,” Ausburn says. “So we’ve been communicating pretty regularly with our sales reps and customers, letting them know when our converting capacity is getting close to being tapped out. That has led a lot of people to change their order patterns, so they’re ordering out a lot further and maybe in different quantities than they have in the past, just to reserve their space in our converting lineup and manage their own inventories.”

Finally, Tucker says, it has never been more important to communicate internally. “I’m sure we’re not alone in having a bunch of people that have been mentally wrecked over the last year and a half,” he says. “The mental health of our employees is hugely important, and I don’t think enough people are talking about that. Again, it comes down to communication: Talk to them. Check in with them. Let them know that help is available when they need it.”

Planning for Post-COVID

With so many ongoing challenges yet to be resolved, it may be difficult to look too far into the future. But the way boxmakers respond to today’s shortages and hurdles will pave the path to future success.

For example, despite a worker shortage, Wasatch Container has been focused on building a stronger team. “Within the last year, we’ve hired roughly 15 new employees,” Frisch

says, noting that that represents about

a quarter of the company’s total workforce. “And, even though entry-level positions are a bit of a revolving door, we’ve been able to retain most people we’ve brought on.”

One reason for the company’s success is a personalized onboarding program that promotes relationships within the team even as it imparts practical knowledge. Along with a detailed training and safety program, the company makes sure each new hire has a one-on-one lunch with a company owner during the first month of employment.

According to Frisch, “that’s been very, very effective on both sides. I get to know them; they get to know me. They get to hear about our culture and understand who we are and what we’re doing. And I learn about them—what their family is all about, what led them to us.” The ultimate goal? “We’re trying to get a deeper bench on all our equipment,” Frisch explains, “which is helping us with our scheduling, employee development, and retention.”

No one knows when the global supply chain will begin to look like its pre-COVID self. Yet workplace strategies that focus on what can be done now—improved communication, constant outreach, equipping for the future—will help to strengthen a company’s foundation both for today’s challenges and tomorrow’s opportunities.


Portrait

Robert Bittner is a Michigan-based freelance journalist and a frequent BoxScore contributor.