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DOES THIS WIDE-FORMAT graphic producer’s story sound familiar?

“Business is crazy right now. We have more work coming in than we can handle. Everything is in short supply – plastic, wood, vinyl, adhesives, paper. And prices are all over the place. Almost every week another supplier announces a price increase.

This week, we expected to receive a product we ordered three weeks ago. Today, the supplier informed us it will take another two weeks. Our customers aren’t happy waiting five weeks for a product that was previously delivered in a matter of days.

I’ve been stocking up on material when possible, hoping that I guessed right on what is needed for future products. But it definitely puts pressure on our cash flow. Even when we get the materials, we can’t get the people needed to produce all the orders that are coming in.”

Why is this happening? How can we ease the pressure?

WHY SUPPLY CHAINS FRACTURED

When mask mandates were first lifted, businesses eager to return to 2019 growth patterns ramped up faster than expected. The surge in demand affected every supply chain link, from the procurement of raw materials to the manufacturing and delivery of finished products.

The challenges were complicated by pandemic-related disruptions in the availability of labor, delivery trucks, cargo ships, and manufactured products.

Some supply chain issues won’t be fixed overnight. Wide-format graphics producers may have to diplomatically reset customer expectations while researching and suggesting creative alternatives.

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To better understand the complexity of wide-format supply chains, we talked with Jason Metnick, COO at S-One Holdings. For the past 25 years, tech-savvy S-One subsidiaries such as LexJet, Abaqa, Brand Management Group, and Utopia Digital Technologies have used customer data and predictive analytics to develop, manufacture, and distribute digital print media for wide-format graphics, signage, décor, photography, art, and design companies.

S-One’s global supply-chain network includes raw-material manufacturers, media coating and converting companies, and dozens of transit partners. S-One manages warehouses in Singapore, the Netherlands, Germany, the UK, Canada, and in five US locations.

“Our supply-chain-management team has close relationships with suppliers and shipping partners to try to minimize shortages,” explains Metnick. “Before the COVID shutdowns, we stocked up and have ample supplies of materials our customers use most often.”

Metnick believes many wide-format supply chain issues are primarily related to problems with international shipping and ground transportation.

When ecommerce skyrocketed during the pandemic, so did the demand for package deliveries. But many truck drivers are aging out of the workforce and not enough younger drivers are being hired to replace them.

Plus, ground shipments involving 400-plus miles take longer than in 2019 due to 2020 federal regulations that require all commercial trucks to use electronic logging devices. These devices enable safety agencies to enforce rules requiring long-haul drivers to take a 10-hour break after working a maximum of 11 hours a day. Drivers accustomed to taking a seven-hour break after a full day of work are fined for non-compliance. To cope with these changing conditions, FedEx and UPS suspended two-day guarantees.

Delays in shipments of products made in China and Europe can be attributed to the major consolidation of shipping companies that occurred in 2019.

Demand for overseas shipments had fallen so much there was excess capacity, explains Metnick. “When shippers couldn’t make money, they started consolidating fleets.” Many ships were taken out of service.

Downsized maritime fleets didn’t matter so much during the COVID shutdowns when inkjet media manufacturers cut back on production.

But transit troubles and labor shortages were noticed after businesses called furloughed employees back to work. Millions of employees chose to resign to either change careers, seek better jobs, start their own businesses, or go freelance. The extended unemployment benefits provided a financial cushion.

Some West Coast dock workers joined ecommerce fulfillment centers where they could earn more money and enjoy greater job security. This shortage of dock workers is creating delays and extra expenses for unloading shipments to the US.

From an airplane over California, “I saw at least 200 container ships sitting in the Pacific Ocean off Long Beach,” said Metnick. “They were just waiting to come in port.”

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PREDICTING THE UNPREDICTABLE

Agile supply chains require accurate forecasts of how many products will be ordered each month. Predictability is easier when paper merchants negotiate contract prices with high-volume buyers of papers printed on web offset presses.

But supply chain networks grew more complex after wide-format digital color graphics printing in the mid-1990s ushered in the era of shorter print runs on a wide range of materials.

LexJet, founded in 1996 (when the Internet was in its infancy), introduced an innovative business model in which inkjet-media phone sales reps stored customer data, comments, and questions in a database. LexJet used this data to offer personalized customer service and analyze the types of inkjet-media innovations that graphics companies would need to diversify and grow.

Today, LexJet operates an Amazon-like B2B marketplace through which tens of thousands of customers place online orders for multiple brands of inkjet media, printers, display systems, and finishing supplies. LexJet also offers its brand of inkjet materials.

All orders placed through LexJet’s website are fulfilled on a first-come, first-served basis. Big customers don’t get preferential treatment and wide-format printing newcomers can ask customer-service reps to suggest lower-cost media options for specific applications.

When LexJet customers give account reps a heads-up about upcoming projects that might require larger than average orders for certain types of materials, the supply chain team makes sure enough of the desired materials will be stored in the warehouse closest to that PSP’s location.

As B2B ecommerce continues to grow, other inkjet-media suppliers may follow LexJet’s lead.

WHAT YOU CAN DO

Today’s wide-format supply-chain issues may not be resolved until Q2 of 2022 if the demand exceeds the supply for retail and event graphics during fall tradeshows, holiday promotions, and the 2022 Chinese New Year.

For now, investigate what materials are available from distributors closest to your place of business.

Learn about alternative materials you could use for the applications your shop produces most often. For example, if your vendor runs out of the paper your shop typically uses to print posters, consider polypropylene.

Give customers incentives to place orders further in advance of each job. For example, announce temporary higher rates for quick turnarounds.

Longer term, learn how to use an ERP system with your print MIS and workflow automation system. Accurate ERP data can help monitor current inventory levels, track price changes, and assess the delivery records of each supplier.

To minimize the impact of cost increases, PSPs with bigger facilities can stock up on popular types of materials before announced price hikes take effect.

Smaller shops with limited storage space should over-communicate with suppliers, says Metnick. A well-informed vendor can act as a business partner and suggest cost-saving solutions.

In their “Trend Report: Supply Chain Resilience,” Deloitte analysts suggest rethinking how your business selects and evaluate suppliers. Training employees in supply-chain management practices can also help. Employees should learn how to gather and analyze the right data to make good supply-chain decisions, monitor and mitigate risks, communicate effectively with supply-chain partners, and develop contingency plans.

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