The effects of the COVID-19 pandemic are still impacting the global supply chain, and businesses are trying to do their best to be resilient and move forward. Relying on the right wood product manufacturing company is necessary to avoid the worst situations and receive your products on time.
Here is some advice to make the best choice: keep on reading the article!
Wood product manufacturing companies & COVID-19: the situation
The spread of the COVID-19 pandemic in 2020 forced companies to close, consumer demand was lower, and industrial activity decreased.
After lockdowns, demand has rocketed very fast, but manufacturers and distributors have not been able to produce or supply as much as they did before the health crisis, causing chaos in the global supply chain that unfortunately is continuing today.
Empty shelves, rising prices, and long delays are consequences of this awkward situation that is affecting many different sectors, including services and goods ranging from shortages of electronics and autos to difficulties in the supply of meat, medicine, and household products.
Those companies that relied on China especially for most finished products and components are now suffering debilitating supply chain shortages.
In this video by the CNBC, you can learn more about how China’s evolving zero COVID strategies are slowing down global supply chains:
Please accept marketing-cookies to watch this video.
Below are the major problems that are present and some advice to overcome them without negative effects on your business.
1. Uncertainty and delays
Production delays during COVID-19 are causing empty shelves and very long lead time: clients wait even six or seven months to receive products they order, causing serious damage for their business.
However, it’s not all bad. This situation has led to a greater focus on supply chain evaluation, especially in terms of long-term supply chain strategies. For example, if in the past many companies gathered as much inventory as possible at the lowest cost, today they seriously evaluate risk before making a decision to be competitive.
In this context, finding a supplier that can provide on demand and flexible solutions is crucial. Being able to produce goods in small lots and only when clients place an order is a great advantage to reduce possible risks.
2. Logistics issues
The arrival of goods in such markets as North America and Europe is limited due to the closing of major global ports largely in Asia. Therefore, container ships must wait to dock sometimes for as long as three weeks, as congestion is unimaginable.
Everything became even worse after Russia’s invasion of Ukraine. According to this article by Wired, more than a million containers that were sent to Europe from China by train—on a route that goes through Russia—must now be sent by sea, as sanctions are serious.
This situation restricts global trade and makes it difficult for companies to import products and refill their inventory.
Consequently, consumers see higher prices and must wait a long time for retail shelves to be replenished.
Relying on a supplier located in your own country can be the solution to avoid these problems. Choosing a multiplant wood product manufacturing company with production sites in both Europe and the U.S. has great advantages:
- you can be sure you receive your product on time as scheduled
- if some major damage occurs at one of the plants, it can quickly switch production to another plant without any negative effects for clients
Just in time delivery is also fundamental. Some suppliers can provide customizable private stocking solutions, manufacture products in advance, and store them in secure and safe warehouses. In this way, clients can order their components from stock with virtually instantaneous delivery.
3. Rising costs
One of the most evident consequences of the supply chain crisis is the price increase of raw materials, components, and final products. Moreover, the growth in labour, energy, and transportation costs is contributing to inflation around the world. Consider that Europe’s wholesale gas price surged by 69% in response to the invasion of Ukraine. (Financial Times)
Bloomberg reports that trucking costs increased by 36% year over year in 2021 due to bottlenecked materials, ports, and pandemic customer demand. Shipping companies saw immense growth in 2021, with the cost of a 40-ft. container increasing from $1,331 on average at the end of February 2020 to a peak of $11,109 by mid-September 2021.
To stay ahead in the market, you should find a supplier that can help you optimize production costs. Cost optimization doesn’t just mean buying products at a lower price, as there are many steps during production that can directly or indirectly influence overall expenditure.
The key is making smart investments that deliver high returns.
An expert wood maker can set up a very effective production process to guarantee maximum efficiency:
- providing realistic prototypes of the final product to anticipate possible problems that might cause unexpected costs
- avoiding wasting material and obtaining precise products, saving a lot of money
- giving you the chance to test products before actual production, producing smaller lots to understand which ones are more successful
- sending products on time so that you can start selling as planned
- offering customizable private stocking solutions so that you can save warehouse expenses, which are usually very high
Moreover, wood is a cost-effective material despite what most people think. Consider that it doesn’t require moulds, it is very flexible, and it can be machined quickly with the right technologies and tools.
It means that the initial investment is much lower compared with plastic. Moulds are very expensive, and if something goes wrong, you must make a new one, wasting time and money.
4. Investment in technology
The supply chain crisis proves that companies that continue to make smart investments in the most innovative technologies are handling the actual situation better.
A reliable manufacturer has a strong focus on Industry 4.0 and Information Technology and invests a lot to get the newest machinery and systems to make the company a smart factory based on automation, interconnectivity, machine learning, and real-time data.
All these aspects make the company more flexible during production and design phases, guaranteeing a fluid and adaptive organization even in the worst situation, with projects carried out, operations kept up to date, and unnecessary added cost avoided.
An expert supplier should adapt quickly to changes in trade flow, new regulations, the impact of COVID-19, climate change, trade tensions, and other geopolitical issues. A wood manufacturing process based on digital systems and technologies lets you optimize operating costs, reduce lead time, and satisfy customers’ needs.
The Minelli Group has been in the wood product manufacturing industry for more than 80 years. We focus our expertise on manufacturing top-quality wooden components, satisfying our customers’ requirements, respecting deadlines, and avoiding delays.
If you have a project in mind, don’t hesitate to contact us! Our experts will be glad to evaluate your plan and help shape your idea.
