Let’s discuss three real strategies for mitigating risk in your contract packaging supply chain.
1. Reduce the number of suppliers to remove unnecessary freight costs, risk and delays
The Risk: A supply chain with four suppliers requires cutting POs to four vendors with four product movements between them, which requires your team’s time to manage in step to ensure continuity providing multiple opportunities for delaysIt’s difficult to account for the trucking company not having a driver today or for surprise fuel surcharges
Reducing Risk and the Reward:
Issue one PO for a finished good to an integrated contract packaging supplier with supply chain management capabilitiesExecute the part that you have the most control over: Sending your product to the contract packager in bulk from your plantReduce costs because everything needed to produce is under one roof besides the first and last leg of freight rolled up into the costReduce cost because you’ve removed multiple markups for four vendorsUse the supply chain team’s time to focus on higher-value projects
2. Re-shoring
The Risk
A 20- or 30-year-old strategy had a massive positive impact on the bottom line…until the cost of shipping product back to the states to sell to consumers increased over 400%Increasing wages and travel costs make this model less desirableLogistical risks that come with delays in container ships being unloaded at U.S. ports and with product getting moved across the countryPower shortages in Asia threaten the ability to produce
Reducing Risk and the Reward:Onshore the production of finished goods in the U.S. and consider sourcing materials and services from domestic sources to overcome increasing wages, travel costs, energy shortages and freight delaysWhen companies like Walmart and GE start to employ re-shoring strategies, it might be time to pay attention
3. Implement Automation
The Risk:
Your company can start producing in the U.S. again, but “Where are we going to find the people to do it and will they show up?”
Reducing Risk and the Reward:
Time-tested strategy provides an increase in productivity, quality and consistency while reducing wasteYour robots live in your facilities and don’t require breaks, lunches, raises or vacationAll of the of automation in the world still takes some amount of labor to run, but by reducing the quantity of labor needed, you put yourself ahead of the game
Conclusion:
Your supply chain is wrought with unpredictable risk, but your strategy to mitigate that risk will be key to the success of your organization’s survival and ability to thrive in the coming years and decades. At Outlook Group, our focus for years has been providing a shortened supply chain in the U.S. supported by automation. Sound like a dream? No need to pinch yourself—give us a call to discuss partnering to reduce your supply chain risk.Author: