Supply Chain Update: No Signs of Relief in Sight

By Matthew Bodoff

The Russia-Ukraine conflict has exacerbated an already-strained supply chain by creating uncertainty in the global economy. Gas prices shot to new highs at the start of the war, and while they’ve since leveled out while producers up capacity to compensate for sanctions, it’s a cost that impacts shipping and logistics, not to mention the chemical industry. Even if prices at the gas pumps drop, it doesn’t necessarily translate to the chemicals that support the resin industry falling in kind. This is because the supply chain of bulk chemicals that feeds the resin industry is still capacity strained and isn’t directly affected by movements in oil prices. European nations more closely affected by the Ukraine conflict face a more complicated outlook, so it’s safe to assume we’ll see some more negative consequences move through the market.

Here are a few critical areas that all companies — fabricators, distributors and suppliers — can focus on to keep their supply chain moving in 2022 and keep costs in check:

1. Diversify and secure supply lines. This means looking into adding new lines or multiple vendors for the same product category to guarantee a stable supply and avoid product shortages. Increase safety stock to account for shipping or material delays.

2. Improve visibility of logistics and supply chain. If you do a lot of shipping, work with your carriers to guarantee dedicated freight lanes. Consider ranking your customers to ensure you always take care of your top-tier customers first.

3. Increase capacity without increasing labor. De-bottleneck production areas where possible to streamline operations without adding more labor. Optimize your product portfolio to focus on products and jobs that maximize margin velocity. Focus on products that earn the most margin and keep production lines running smoothly while eliminating remakes.

4. Monitor inflation and costs. Don’t plan for or promise customers short-term relief as supply chain fundamentals are not moving in a positive direction through 2022. Expect further increases in transport and logistics costs. Work on securing global supply options but remember that security of supply needs to remain your top priority over the lowest possible cost. Revisit your pricing structures as needed and tailor job quotes to account for predictable increases depending on the project timeline.

By and large, it’s all about supply and demand, and demand will remain strong throughout most of 2022 while supply tries to keep up. There’s good news in that, by the way: Business is booming! It’s up to everyone — consumers and professionals — to be aware of the volatility in the marketplace and its consequences on our industry and to pivot to strategies that minimize risk.

Matthew Bodoff is a business development and marketing manager for INEOS Composites, a manufacturer of general-purpose and highperformance grades of unsaturated polyester and vinyl ester resins, gelcoats and low-profile adhesives for the plastics industry. To learn more about INEOS Composites, visit www.ineos.com/ composites.