Tag: shortages

So When are We going to get our Gear…..? Or We need stock !

Posted on by markybrett

When we thought it was all over, it starts up again. For two years all market places had experienced major supply issues due to huge disruption within the supply chain. Some of us were starting to think that maybe the end was in sight.

project44 2021
Resilinc 2022
Raconteur 1/05/2022

But no….

Any one of these factors could prove sufficient to blow even the best-planned
supply chain off course. As China, the world’s factory, struggles with pandemic enforced port closures, supply chains that were already under stress are reaching breaking point. The world is redrawing its
economic activity to cut out Russia after its invasion of Ukraine – an action that is affecting supplies of grain and cooking oil, as well as the oil we use to power our factories and vehicles. Catastrophe is being piled on top of catastrophe.
“The expanded global nature and contracting diversity of supply chains have
together exacerbated this effect,” notes
Tim Morley, regional director at Information Services Group, a global research
and advisor.

In response to the War in the Ukraine …..

“Supply chains have not had time to recover, and we now face a critical tipping point that could have both supply and cost ramifications rippling through industrial and consumer markets for years to come.” (Kate Tamblin is chief product officer at risk management specialist Achilles and author of the company’s supply chain resilience index).

And more ….

“We’ll continue to see disruptions unless countries and businesses get serious about
building resilience by holding more inventory and excess capacity as well as
restoring industrial capabilities that have been offshored,” Professor Johnson, Head of Operations management, Warwick Business School.

So many quotes and so little comment .There a number of factors not included; pent up demand, falling demand, changing demand and labour shortages. Reflecting the complexity of the issues we are all facing I struggle to add what has already been said by much better commentators than some geezer who waffles on about party products. But struggle I have and there is stuff I have to say.

But before that , here is another graphic ( I hesitate in using the word interesting ,as it is much overused but seldom relevant when it comes to Graphics) , which , to me, is quite illustrative (its a graphic, it should be ).

Quite simply that it suggests that despite that massive use of IT and data the biggest influence on decision making process is People.

McKinsey 2021

People are complex. Nothing new there. Yet, that complexity has been muddled or at very least changed by Covid . This impact is yet undefined and consequently unknown. But there has been a significant psychological change in us all . As in us all ordinary folk. Impacting both consumer and all those within the supply chain. Decisions will and are being made differently. There within in industry there is much uncertainty over everything from supply to demand that the decision making process becomes more hazardous because there is little historical data to work from.

I can’t speak for anyone else, but now, I often question a decision purely on the basis that I am very uncertain of the outcome. Where in the past I could have quantified the outcome because of previous similar decisions and their outcomes. Within industry many decisions are having to be made without really knowing the consequences outside their own market place, despite the fact that a bucket load of stuff is happening outside their market place which is affecting them in turn. I suspect product sourcing is undergoing its biggest change in the last fifty years.

Decision making has changed, we all know sort of why but few if any know ‘What To’. It still does not alter the fact that getting your Gear is not going to get any easier for some time to come. If you are UK based you can look forward to a possible National Rail strike this summer, which will throw another spanner in the works. Is there a connection with everything else ? Probably, for a couple of reasons….

  1. High inflation created by the Ukraine War, post covid disruption and energy issues, leading to pressure on wages .
  2. High Employment and shortage of labour
  3. All of the above puts the Unions in quite a strong bargaining position.

So nothing is going to change for some time. Or rather loads of things are going to change but we are not sure what. However, we can be pretty certain that the supply side is going to be very bumpy for sometime to come.

Finally, for those who are, oddly, not aware of any supply issues , just go into any major supermarket chain and take a peak at the empty spots on the shelves. And if any one chain has filled them then look at what they have filled them with (eg doubling up on product that usually would not warrant that space ).

And a bit more finally, if you are not experiencing stock issues, and are not expecting any, Well Done ! What’s your secret ?

Inflation Coming…but Stock isn’t !

Posted on by markybrett

The Bank of England recently highlighted the danger of inflation having dismissed it a few weeks before. However, nothing has been so blindingly obvious as the sight of inflation on the horizon. These are the bank of England’s words in April of this year

Inflation is below our 2% target, but we expect it to rise to around the target this year

Below is the US inflation in May

The annual inflation rate for the United States is 5.0% for the 12 months ended May 2021 after rising 4.2% previously, according to U.S. Labor Department data published June 10. The next inflation update is scheduled for release on July 13 at 8:30 a.m. ET. It will offer the rate of inflation over the 12 months ended June 2021.

Now we are , of course not the US, but to believe that inflation in the UK will be only 2% is , I believe, either very naïve or very stupid. I hope I am wrong.

Driven by rising prices for food and for second-hand cars, the headline annual CPI rate of inflation rose to 2.5 per cent in June. City economists had forecast a 2 per cent rise. Month-on-month inflation rose 0.5 per cent, down from 0.6 per cent in May but ahead of City forecasts for a 0.2 per cent rise.

Richard Fletcher – The Times July 14th
  • Huge rise in factory gate prices (Far East Especially)

China’s factory-gate prices rose at the fastest pace in more than three years in April, fuelled by rapidly climbing costs for metals, oil and other materials.

The producer price index rose 6.8% in April from a year earlier, accelerating from March’s 4.4% increase, the National Bureau of Statistics said Tuesday. The reading was the highest since October 2017, when the PPI climbed 6.9%, and beat the 6.5% increase expected by economists polled by The Wall Street Journal.

Prices in the production sector continue to march upward amid rising international commodity prices, the bureau said.

On a monthly basis, China’s PPI expanded 0.9% in April from March, while the price of the means of production increased 9.1%, according to the bureau. The monthly decline was mainly driven by falling prices in the oil and non-ferrous metals industries. -Marketwatch.com

  • Massive increase in shipping Costs
Source Freightos
  • Increasing demand

Nearly all commodity prices rose in 2021Q1,
continuing the marked rebound since mid-2020
(figure 1.A). Almost all commodity prices now
exceed their pre-pandemic levels, and those of
some commodities, notably metals, are well above
their previous levels—copper prices were nearly 50
percent higher in March 2021 relative to the end
of 2019. The recovery has been driven by the
improving global economic outlook, aided by
significant monetary and fiscal stimulus in
advanced economies, and steady, although
uneven, vaccination rates. –World Bank

  • Increasing Wage rates

Additionally, pay growth is being affected by the base effect where the latest month is now compared with April 2020 when earnings were first affected by the coronavirus pandemic; April 2021 saw a growth rate of 8.4% for total pay and 7.3% for regular pay which feeds into the strong 5.6% average growth rate for February to April 2021.

ONS June 2021
  • Shortage of labour

Sounding the alarm over the risks to economic recovery from acute labour shortages, the Recruitment and Employment Confederation (REC) and the accountancy firm KPMG said the number of available workers plunged in June at the fastest rate since 1997.

Recruitment firms are reporting hiring challenges across several sectors of the economy, led by shortfalls in areas such as transport and logistics, hospitality, manufacturing and construction. …….In a sign of the growing pressure on companies, surveys from the British Chambers of Commerce published on Thursday showed 70% that had tried to hire staff in the three months to June had struggled to do so.. The Guardian July 2021

Lest we not forget , vast quantities of Government ????????

Now this is not the first time but it is for very different reasons a rather strange paradox as we have rising prices but the stuff we want, there is nothing to buy. A bit of an exaggeration, perhaps, but there is a shortage of product both unfinished and finished . In the UK in the early seventies , when inflation was rampant there were shortages but they were due to industrial action, such as the Coal Miners strike and the Middle East Oil crisis. Today’s shortages are due to disrupted supply chains primarily due to Covid, turn around in demand and shipping .

From Micro Chipmakers, Car Manufacturers, Construction through Food and us humble party suppliers, there is not enough product within the supply chain. Many have temporarily reduced their ranges to concentrate on core product. So are prices going up on product that does not exist. Not quite. However, it provides a temporarily dilemma. Retailers with healthy cashflows don’t mind a bit of inflation. I can go back to inflation nearing 20%. Traders without borrowings loved it . It meant more cash and consequently the same margin on a bigger take. The same applies to 4/5% inflation but if you are losing turnover in not be able to get core product, you don’t benefit much from a price increase.

The Consumer looses out on all counts. In the short term they can’t get exactly what they want , and when they can they have to pay more for it. However, something else comes into play with Consumer Purchasing psychology . Whilst I do no think there have been any studies yet, but there is circumstantial evidence to show that when a consumer cant get the brand they want, they buy an alternative and maybe don’t switch back.

Many do not expect to see much improvement in the supply chain until well into 2022. The problem being exacerbated by the inability to build any stock as all product is going into supplying current orders. That said as covid continues its destructive path , it does all it can to maintaining disruption in manufacturing and supply.

So what to do ? If you are trading you need stock and if you put off buying because of price increases, you are

  1. Missing revenue because you don’t the product (or service) to sell.
  2. Waiting means the possibility of further price increasesand maybe even further delays , leading to your customers going elsewhere.

There are times when stock is King. This is one of them.

Shortages…..what do you mean? We are not in the middle of a bloody war !

Posted on by markybrett
National archives (Note: Fires not Fries)

Toilet rolls …No. Sanitisers ….No. Pasta….No. Chips….Yes.

Now before you start calling your local chippy and Pre-Ordering your month’s requirements or buying a new freezer to keep a years worth of frozen chips, it is not the tasty sort we are talking about.

Jaguar Land Rover, Ford, Volkswagen, Tesla to name but a few are cutting back on production because there is a shortage of semi conductor chips that are used in modern day vehicles. This has come about because during the pandemic there was a huge drop in demand from the automotive industry so chip makers switched to chips for laptops, electronic gadgets, and mobile devices etc as the demand spiralled .

Yet this is just the tip of a veritable iceberg. Just go into your local supermarkets, and look carefully at the shelves, you will start to see a lot of stuff missing . Construction materials , medicines, bikes, and many food products are just a growing list of products that are going to be hard to get over the next six months .

The construction materials shortage has impacted self builders, renovators and DIYers, and further problems are expected

Jack Woodfield Homebuilding & Renovating

There is currently a global shortage of raw material shortages, stemming from global demand and other external factors (including the slowdown and in some instances, factory closures, outside the UK), which continues to constrain production of certain products, such as insulation, paints and adhesives, as well as packaging for products.

Jack Woodfield Homebuilding & Renovating

Samsung warns chip crisis could lead to shortage in TVs and home gadgets

Samsung’s chip division saw profits drop after it had to close vital US factories in February James Cook ,Telegraph April 2021

A combination of covid, major supply chain disruption , demand changes , cost and organisational issues within world shipping have created that oft used phrase a perfect storm.

What may come as a little bit of a surprise to some (but not perhaps those within our own industry ) is that you may not be able to not be able to pop into your local Party store , or your favourite party web site and buy the latex balloon of your dream. The worlds latex balloon manufactures are being faced with exactly the same problems as that of rest of worlds supply chain.

  • Extraordinary demand (throughout Covid)
  • Shortages of raw materials
  • Manufacturing limitations due to covid restrictions
  • Shipping disruptions

The following is an an extract from a statement put out by the Balloon Council of America (Organisation representing major Latex Balloon Manufacturers in the Americas.)

Industry Update: Growth and Supply Chain Impact
It has been over a year since the pandemic began impacting our lives and business. As leaders in the balloon
community, it is important that we address the disruptions in the supply chain that the industry continues to
experience.
Although we are shipping large quantities of balloons, we have seen a marked increase in demand and the reality
is COVID-19 continues to impact all segments of our industry. Some of the challenges that we faced early on
continue to cause disruptions and impact the overall business.
• COVID-19 has continued to impact employees. Safety is essential. In many companies, new work rules,
social distancing, and physical barriers have been necessary to ensure a safe work environment and these
changes usually mean a reduction of efficiency and output. We have also faced challenges in finding and
retaining employees during these challenging times.
• Balloons are an element of a global supply chain, and many suppliers, both here in the U.S. and overseas
that we don’t control, have been similarly hit, impacting their ability to deliver raw materials or services.
This has been an ongoing issue in the past year.
• The whole supply chain, including freight companies, continues to struggle to operate efficiently and has
not been as predictable pre-COVID-19.
We know this is frustrating for balloon buyers at all levels. Manufacturers, related products suppliers, and
distributors are doing everything in our power to ramp up volume and responsiveness. TBC members are trying
hard to control the things we can, such as increasing production capacity, asking our employees to work overtime
and recruiting additional workers.
It will take more time for the supply chain to reset but we are tirelessly working to achieve our goal to return to
pre-COVID-19 service levels as quickly as we are able.
The global vaccination effort currently underway offers a beacon of hope that a return to normality is a possibility
in the not-so-distant future. That said, every day we are hearing stories about new variants that may or may not
respond to the existing vaccines. Few expected the pandemic would be this severe for this long, and none of us can
really project when its impact to industry will be over.
Balloons have brought joy to many people throughout the pandemic. As an industry, we are committed to doing
everything possible to get business back to pre-COVID-19 service levels. We are all working to make that day come
soon, and our teams won’t be satisfied until we achieve that.
Thank you on behalf of all the manufacturers and distributors who are TBC members for your patience and
understanding during these challenging times.

I make no apologies about the length of this specific extract as hopefully it will be of interest to the odd reader who is involved within the party industry and it would be remiss of me if I did not highlight these problems, particular as this product has put food on the plates in our household for many years.

Moreover, these issues are the very same (or similar) facing the entire supply chain in many product areas.

Most consumers wont even notice , or rather they may have difficulty in getting their brand , but there will be an alternative. Yet higher up the supply chain, the pain will be greater. Because of the way the supply chain operates in most markets, it is just not that straightforward in finding another supplier.

What does of course happen when supply dips , and demand remains constant or increases then so do prices.

Yet we are not at war. Well maybe we are in a sense, of all trying to fight a virus, which is complex enough but then putting into the mix the complexities of world trade, there is a inevitably about the impact of the supply of goods and services. Despite this ‘inevitability’ , none of us actually know what is going to happen from day to day . So if you cant get exactly what you want today, but you want exactly what you want, hang on a bit and you will probably get it. If you don’t want to wait buy something else.