A CLOSER LOOK AT THE CURRENT SITUATION
There is no argument that over the past year we have all been faced with challenges from an individual level to a global community level. Ideal Products, however, believes facing these challenges has made us stronger as we learn how to adapt and grow from these challenges together. Now that many can happily say goodbye to 2020, we realize 2021 is not going to be an easy ride either. One big challenge we see for 2021 is ramping back up infrastructure and inventory levels, in order to support increasing demands, now that the world has learned how to somewhat adapt and put measures in place that allow businesses to safely operate at some capacity. With this, many (including Ideal Products) are currently facing shortages, order delays and rising costs. This is causing headaches and frustration across the board. At Ideal Products we care about our customers so we decided to do some research and digging to figure out what is happening and how we can work together to make the best of the current environment.
To analyze this situation we broke down our product process starting from the raw material to the finished products landing on site. Let’s begin with a visual representation of the process.
Now we will break it down into sections, starting with the raw material.
Currently we are seeing shortages in the raw material available – from lumber to aluminum. These shortages are coming from new sources of demand triggered by lifestyle shifts due to Covid-19. Looking at specific examples, we see a spike in the demand for aluminum cans as people are now drinking at home instead of at bars or restaurants. Workout equipment, game consoles, patio heaters… the list goes on! There has also been an increase in medical supply production which has taken priority over other industries. The second piece to this puzzle is the shortage of man/woman power. As government continues to restrict full capacity, suppliers have a harder time keeping up.
As the threat of tariffs continue to hang in the air, we are faced with uncertainty and unknown additional costs. With a new round of tariffs on imported aluminum from 18 different countries, US manufacturers have in turn increased their domestic costs due to maximum capacity and increased demand. North American mills have now put allocation programs in place. Allocation for steel means even harder to get material – you get what you get or you find it somewhere else, which usually means at a higher cost. Here is a short blog from MetalMiner.com which expands on this a bit more: https://agmetalminer.com/2020/12/18/a-is-for-allocation-steel-markets/ .
We are also facing shortages in transportation. Shortages in shipping containers, ships, trucks and truck drivers as well as congested ports are causing huge headaches across the Globe. With the economic slow down in 2020 followed by a boom in economic activity (once business started to open up again), shipping and trucking companies were bombarded. The transportation industry is facing this increased demand with less resources and man/woman power. On top of this, our new Covid-19 lifestyles are changing our consumer behaviour. Trucking and shipping are left to quickly adapt to this new flow of goods.
Our suppliers are facing the same problems as we are! With the decrease in materials and man/woman power, they are challenged with order delays, transportation delays, restrictions on worker capacity, and increased business costs.
From our warehouses to our main offices in Canada, the United States, Hong Kong and China, we are working very hard and doing everything in our power to get our products to you in a timely and cost-effective manner. Here are some solutions we are putting in place:
- Expanding our long-term forecasting.
- Increased gathering and analyzing of market trends.
- Developing more automated internal controls and reporting tools to help quickly identify critical numbers that ultimately increase productivity.
- Working more closely with logistics and freight companies.
- Collaborating with vendors to build on our strategic channels of raw material supply.
- Expanding resources, targeting inventory, infrastructure, and customer support.
- Increased resources to our website, idealproducts.ca.
- Engaging with our customers to work through the challenges together.
Although we can’t magically wish the current state of affairs away, there are options and actions you can take.
PREMIUM PRODUCTS / SUBSTITUTIONS
Consider using premium products and/or substitutions. Many of our products have similar if not better performance and can provide similar results. They may cost a bit more now, but choosing these products may shorten wait times.
Optimize your shipments with bulk order sizes to reduce congestion.
Give yourself some extra time to look at your forecasting and plan at least a month earlier than usual.
As soon as new information or changes arise on project schedules, plans, forecasting, etc., let us know as soon as possible.
UTILIZE THE IDEAL PRODUCTS WEBSITE
We strive to keep our website as up to date as possible with resources that can help educate, plan and increase your productivity.
If you have any questions, concerns or challenges, we are here to help you. The Ideal Products’ team of experts are ready to help with whatever your challenges are. Find your locally dedicated representative here and give us a call.
We thank you for your continued support and are here to work with you through these challenges.
Ideal Products Group of Companies