Many industries and suppliers experienced supply chain delays following the Covid-19 pandemic, including manufacturers in the paper and pulp industry. Although businesses are beginning to bounce back as we head into the second year of a post-pandemic world, the impacts of recent disruptions cause initial issues to linger.
In this article, we’ll figure out what challenges lie ahead for operations that are struggling to produce paper products and supplies in 2023.
Challenges in this year’s paper supply chain
Raw material supply
Paper and pulp production has experienced numerous demand fluctuations as the need for certain products begins to decrease, while others increase. Paper producers have adjusted their production in light of these changes. During the pandemic, however, suppliers were severely impacted by sudden spikes in demand. This led to historically low inventories and significant supply shortages.
Now they’re still navigating bottlenecks when it comes to sourcing raw materials like wood pulp for production. Ramping up speed is no easy task because demand for these raw materials is compounded by need for similar materials in adjacent industries, like lumber for construction.
Labor shortages that remain constant post-pandemic further exacerbate existing supply chain issues.
A year ago, businesses paid approximately $1,920 to book a 40-foot steel container for shipping. At the height of the pandemic, companies were paying about $14,000 for the same container—a 600% increase according to CNN Business. While prices have come down dramatically, other disruptions continue to impact operational capacity.
Pandemic shutdowns forced many orders to be canceled mid-way through processing. However, when consumer demand surged again, suppliers were left struggling to catch up.
As production for new containers ramped up, transporters saw a significant increase in manufacturing. Because the steel used in production processes got more expensive, the cost of freight containers and transport significantly rose. This increased the frequency of shipping delays at major ports. Unsurprisingly, these costs spread to other modes of transport such as truckload hauling, intermodal rail, and last mile delivery.
How to stay ahead
Stay on top of upstream planning
In an uncertain supply chain landscape, it’s essential to stay ahead of needs to avoid future delays. An AI-based solution can increase the visibility of your supply chain, making it possible for you to unlock hidden opportunities to tighten up procurement processes, especially for indirect materials needed to keep production lines running..
Smart solutions consolidate relevant data in a single solution, so you can gain insight across all plants and facilities within your organization. This makes upstream planning that much more simple. With just a tap of your fingers, you’ll gain insight on:
- Existing supply inventories of indirect materials and MRO parts.
- Recommendations for restocking necessary resources or skipping procurement cycles when overages occur.
- Determining which resources are redundant and where they can be allocated to other plants in the enterprise.
- Supplier performance, measured against predefined KPIs, average usage metrics, and targeted outcomes.
You’ll be able to pinpoint vulnerabilities and inefficiencies in your system before they snowball into something worse.
This system also lends operation managers and procurement teams a digital record of cash flow and onhand inventory values. This makes it easier to keep material orders efficient through bundling, and regularly scheduled restocks that allow you to avoid price hikes and shipping delays.
As prices are expected to rise, adopting healthy spending practices like cutting out rogue spending can help keep your operation costs lean.
Make smart procurement decisions
Harnessing the power of predictive analysis can help you maintain open channels of communication with your supplies.
It helps keep supplies accountable through measurable KPIs and benchmarks and offers actionable insight for when things go awry.
With a totally digital tracking system, you’ll be able to track your inventory and shipment at every stage of the procurement cycle. This makes it easy to find and use only reliable paper suppliers who can deliver and meet your expectations.
AI can help you navigate delays in the paper supply chain
As paper and pulp manufacturers find ways to ramp up production and meet consumer needs, procurement teams will need to take steps to streamline their procurement strategies so as to reduce costs without increasing risk.
Leveraging the right tools can help your procurement team navigate the uncertain supply chain ecosystem with ease.
AI-backed material management software offers you data-driven recommendations, increased visibility, and procurement suggestions for maintenance needs so you always have the right materials in the right place at the right time.
Embrace digital transformation today and build a resilient and proactive procurement strategy for your indirect materials this coming year.