Maintaining Consistent Supply
The steps GWP Group are taking to ensure continued supply for your business
So, with the consequences of this now being widely felt, we wanted to set out the steps we are taking to ensure a consistent, ongoing supply for our customers.
How GWP can help
The following provides a brief overview of the steps GWP are taking (alongside a range of additional strategies that can be employed) to mitigate material shortages and potential price rises:
- Part ownership of Corrboard UK based corrugator, allowing for consistent ongoing supply of raw material
- Vendor Managed Inventory (VMI) and stock holding service to provide a “buffer” of packaging stocks
- Providing a range of cost saving strategies – such as rationalisation, packing time reduction and minimising material usage – to mitigate price increases
- Stringent Coronavirus procedures to maintain production capacity
- Only passing on price increases where this is absolutely unavoidable
Why are there shortages of corrugated containerboard?
Put simply, there are a huge number of factors affecting both the supply and demand of corrugated cardboard material.
The Coronavirus pandemic has rapidly accelerated the shift to ecommerce, which by its’ nature requires increased volumes of cardboard packaging. However, with many countries and regions in lock-downs, not to mention issues with staff absence and illness, COVID-19 has also impacted the ability of material producers to meet the demand.
Add in Brexit causing difficulties at the ports, businesses fearful of having no packaging bulk buying, and large ecommerce businesses being accused of taking more than their fair share, and the issues have rapidly escalated.
For further details, please read this article on cardboard shortages in the UK.
Implications of board shortages
The obvious symptoms of the material shortages are significant price rises in material, as well as extended lead times.
The potential consequences of this, for nearly all businesses, is a lack of packaging. In turn, this can result in extended fulfilment times to customers, missed orders or, at worst, a complete halt to trading.
GWP’s material supply / Corrboard membership
Whilst nearly all packaging manufacturers are struggling to source raw materials, GWP have an advantage due to our association with the UK corrugator, Corrboard.
This has allowed us to maintain consistent supply (and quality) whilst many other board manufacturers are quoting lead times of weeks or even months. The result is that GWP have – unlike the majority of packaging manufacturers – been able to maintain supply to all of our customers, even in the face of unprecedented demand.
VMI / Stockholding
Many customers also rely on GWP’s managed inventory service. This is where GWP will keep agreed stocks of packaging at our site and supply on a “just in time” supply agreement. This buffer of stock has helped to mitigate the worst effects of material shortages and is another way in which we have ensured consistent, ongoing supply for our customers.
With the huge increases in the price of paper used to manufacture corrugated board, this has inevitably led to price rises in both material and finished packaging.
GWP have absorbed as much of the increases from December 2020 and January 2021 as possible, but we have little or no scope to continue doing so. This means that, regrettably, we are now having to pass some of this increase to our customers.
Of course, this is something that GWP are extremely reluctant to do, but the current, unprecedented circumstances mean it simply isn’t viable or sustainable for GWP to continue covering these increases.
Cost saving strategies
GWP will of course be happy to work alongside your business to find potential cost savings and resolve any inefficiencies within your packaging.
We have one of the best design teams in the UK (backed up by various awards) for minimising material usage and therefore costs. This “value engineering” frequently means that a customers’ packaging performs and looks (largely) the same, but uses significantly less cardboard.
In a similar vein, we are also able to analyse your wider packaging processes and suggest improvements that can lower overall costs. For example, reducing packing times can significantly impact labour costs.
Although GWP have regrettably been forced to share the burden of price increases with our customers, we cannot stress enough our reluctance to do this – this decision has been taken as a last resort.
We would also like to emphasize our commitment to maintaining a consistent supply of packaging into your business – something which our supply agreements and warehousing provision is allowing us to do (and which is impossible for many of our competitors).
We understand that these are difficult times, so if you have any questions regarding the current situation, or the steps GWP are taking, then please do not hesitate to contact your sales adviser to discuss in more detail.
Working together, we believe we will be able to navigate these current difficulties.