In the July 2021 issue of Progressive Greetings magazine, The Sherwood Group’s CEO, Jeremy Bacon shared his take on the current global supply chain challenges.
“The pandemic has caused a major disruption to global supply chain. Shipping costs may have grabbed the headlines, but the cost and availability of board in China is the key issue for the greeting card market. Thankfully over 70% of everyday single cards are still produced in the UK”
“The paper and board industry is described in microeconomic terms as a spiral market. A disruption to either supply or demand has a large impact on price. Last year saw the closure of paper and board mills as demand fell and shortage of supply of pulp, the key raw material in manufacture.
“The Chinese economy recovered strongly after Chinese New Year in 2021 which caused hyper inflation with prices going up weekly. Historically board has been cheaper in China now the reverse is true. The situation is not as extreme in our UK business, but we are under price pressure from suppliers who are largely being supportive and pushing the problem in to quarter 3 and 4.“
Jeremy shared some future thoughts and mitigation actions that could be taken to reduce risk in the current climate;
“We have been supportive of our customers, as our suppliers have been with us. We have talked more frequently during the last year, understanding the market situation, sharing, and resolving problems. Forecasting is extremely difficult for everyone when demand is affected by which distribution channels are open. We have some good cases studies from the last year where we have been proactive. One project involved moving a seasonal parcel of work from China to the UK as independent retailers were closed, another was a seasonal promotion in a grocer where the bespoke price label became the limiting factor.
“A high level of communication with all parties in the supply chain is essential to solve an ongoing problem. We will work with customers and suppliers to mitigate both supply and price issues. We need to be creative and do things differently, fortunately we are part of a creative industry. Supply chains will normalise once we are over the worse of the pandemic. I think we are at the beginning of the end, but we still have further to go.”