Supply chain chaos continues to expose opportunities for operational improvement

Much of the news coverage around supply chain disruption has been dominated by the semiconductor market and the commodities supercycle. However, the disruption is almost universal and, much like a line of dominos, the impact is reverberating in areas that typically fly below the radar.

One market showing unprecedented shortages is the fossil-fuel-based resin market. Low profit margins mean manufacturers – of everything from plumbing pipes to household-product packaging – usually have plans to address fluctuating costs, but few of them are prepared to deal with the inability to purchase enough resin to keep their processes running. Given the unusual level of disruption the industry is currently experiencing this may lead to a 15% price inflation for a number of household products in the coming months.

And while consumers are unlikely to respond to this positively, the impact on resin manufacturers operations could be even more profound. But, crises bring opportunities. Many organizations will be assessing the relationship between their procurement functions and operations, ensuring greater alignment between the two. Given the relationship is almost completely symbiotic engineering greater agility into a business’ purchasing activities and increasing the resilience of the supply chain would be timely.

In addition, focusing on operational improvements would enable the business to offset resin cost increases. As the disruption dissipates this would lead to a more effective operational model and a business better prepared for future disruption.

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