Strategic Sourcing Update: The State of the Supply Chain

It is no secret; market dynamics and the global supply chain have changed dramatically over the last two years. To help better understand the state of the industry and how Nosco is working to meet customer goals, we sat down with Kelly Salazar, Nosco’s Strategic Sourcing Supervisor, for a Q&A session. Check out her insights below.

Q|    What are the key factors driving inflation and cost increases in the packaging industry?

A|    The following factors have played key roles in driving inflation and increasing costs in 2021:

• Wood Pulp Demand: The rising need has exceeded supply and demand, escalating raw material costs.
• Transportation Issues: Shipping costs and freight rates are at an all-time high. Additionally, container shortages and port obstruction overseas are adding on to the rising transportation costs.
• Labor Shortages: We are experiencing a huge labor shortage, which has caused an increase in recruitment efforts to help attract potential employees.

Q|    What is Nosco doing and how can we partner together to make supply chain improvements?

A|    Nosco’s Strategic Sourcing team has worked tirelessly to increase the inventory levels of our top raw materials across all value streams. Periodically, we are reaching out to suppliers to request updates on their supply chain and raw material concerns – partnering with them to stock materials at their facilities. Our Strategic Sourcing team then works with Packaging Advisors to forecast customer orders and help identify potential growth areas.

To address supply chain constraints, our Solutions Engineering team is working on label material alternatives to help gain flexibility in our label value stream, and helping to identify standard materials for customer orders. These measures are helping us build a stronger supply chain to help meet customer expectations and demand in the future.

Q|    What is going on in the global packaging market?

A|    Current trends in the global packaging market include:

• Global Supply Chain Imbalance
• Transportation Bottlenecks
• Lack of Labor (Job Openings Are at Record Levels)
• Fuel Shortages and Pricing Increases
• Raw Material Shortages
• Increased Spending on Goods

Q|    Why do lead times continue to be extended?

A|    Lead times continue to be extended due to key factors like transportation constraints, labor retention challenges and stock piling / panic buying.

Q|    What do you forecast for the future of supply chain?

A|    We expect supply chain constraints to continue through to the end of 2021 – extending into the first and second quarter of 2022.