I think most will agree that right now is a very difficult time to be a purchaser of chemical raw materials. It was a perfect storm of unfortunate events that put us in this situation, and the reasons why each individual product is in tight supply vary in complexity. For most, it was the aftermath of 2020 COVID-19 shutdowns that led to low inventories of key raw materials at a time when demand increased, outpacing production. Then there was a host of winter weather, plant fires, and mechanical issues at major producers across the globe that lead to a large number of chemical manufacturers declaring force majeure this year. Throw into the mix a logistics nightmare of equipment bottlenecks, port congestions, and driver shortages and you have a recipe for supply chain disaster.
Industry veterans are comparing the current market to the Oil Embargo in the 1970’s in terms of availability of product. It has gotten difficult to determine just which products are short and why, but the fact that so many products are in jeopardy is wreaking havoc on America’s manufacturing sector. After all, if a manufacturer cannot acquire all the materials they need to run production, they cannot fulfill their customers’ orders. It’s hard to believe we live in a time where a number of businesses have gone into temporary shutdowns for this very reason. Clearly this is bad for business, and consumers are starting to notice as prices on the shelves skyrocket.
So, how do you protect your business? The ability to be flexible, forecast needs, and make decisions quickly has never been more crucial. Businesses with a wider variety of approved vendors and products are better able to use their supply networks to their advantage, rather than companies who rigidly buy only from the same source. No one wants to go through lengthy approval processes when times are good, but good supply chain managers know it is a great practice to get in the habit of. Approving new suppliers or products becomes very important in times of shortage, and sometimes you don’t have the time to wait. Right now, many suppliers are holding customers to historical purchase history due to tight supply, so it is often beneficial to regularly spread out your purchases out through a few vendors rather than trying to seek out a new one out in times of desperation.
It is also a great time to evaluate how a good distributor such as ChemCeed can bring value to your company. Chemical distributors likely have a much wider and deeper global supply chain network than your company, and this can be used to your advantage during challenging times. If the local supplier you always buy from does not have your product in stock, you might not know where to turn, but chances are a supplier like ChemCeed can have it sent from one of the many other stocking points throughout the country. In a lot of cases, product is out there, it just might not be clear to you where it is or on what sort of timeline it can deliver to you, and that is where a distributor can help.
Another thing that is very important for companies to accept right now is that expecting deliveries to be made on a rigid timeline is unrealistic in this current market due to all the troubles with logistics. Planning for longer lead times, forecasting and alerting your supplier of upcoming needs, and maybe keeping a little more inventory on hand than usual can help keep your plant running smoothly. ChemCeed offers customers the ability to place blanket orders to cover their needs for a term of a few months up to a year, and will warehouse the product and deliver to door on an as needed basis, so consider making a change in the way you buy. It might not be realistic to ask for pricing a few days before you need to place an order and expect to receive material on time, even if it is what you always have done in the past. You might need to think ahead a matter of weeks or even months.
“Being versatile during this time is key,” says Dana Brilla, ChemCeed Director of Operations & Marketing. “Our ability to be flexible and fast moving is one thing that helped ChemCeed bail out a lot of customers that were hurting for products. We are also seeing a lot of our customers innovating in their processes too, even making formulation changes and substitutions very quickly just to keep running. We’ve rushed a lot of samples out the door to help with this.” If you are struggling right now, it might just be the time to seriously evaluate the buying process at your company and make some changes too.