Solutions to Supply Chain Disruption

Mark Stainer – Head of Global Sourcing - Supply Chain - April 19 2022.

Retailers are really feeling the pinch of what have been two years of unprecedented disruption to global supply chains. Covid, Brexit, the Suez incident and now Ukraine have all had major impacts on the cost and efficiency of getting goods from A to B. But a host of aftershocks and repercussions involving the prices of raw materials, fuel costs and labour shortages continue to ramp up the commercial pressures on businesses that are designed to run on smooth supply and demand models.

We’ve seen these same events impacting our area. From the start of the pandemic, costs of raw materials for shop fitting have soared. Steel is up more than 150%, timber by 100%, nickel and copper between 30-50% up and powders, glass and acrylics up anywhere between 10% and 25%.

But on top of the costs of the materials themselves, the costs of manufacturing and moving them have also been heavily impacted. A 30% increase in the wholesale price of fuel is taking its toll, whilst shipping containers from China have increased a staggering 500%, from c£2-3K pre-pandemic to £15K per container as we stand today.

In light of these pressures, we’ve been working with our customers to mitigate these constraints in a number of ways:

  • As providers of bespoke products, we currently cost everything on a project-specific basis. Every quote stipulates that the price is valid for five days. Being honest and transparent about the cost of goods, helps our customers to make timely and informed choices. We advise on lead times and advise customers on how delays are likely to impact pricing.
  • Our sourcing team have built excellent relationships with our supply partners; meaning we are able to secure the most competitive pricing available and negotiate to absorb additional costs where possible.
  • Where it is appropriate on high volume work, we offer raw material prices and undertake early blanket-buying to cover whole orders, protecting customers from further price increases over the course of their project. Some customers prefer this bulk ordering – it means stock is secured, shipping delays are avoided and the customer enjoys predictability on price.
  • Where customers are challenged by exchange rate fluctuations, we can work on a surcharge basis, where standard cost prices are passed on at +10%. This helps customers show their stakeholders a maximum agreed selling price that they can hold to, which only decreases if exchange rates improve.
  • We haven’t reacted to market challenges by repricing existing contracts, so our customers know where they are with us. We have escalation clauses in place to cover fluctuations in exchange rates and costs, which will be reviewed when the market stabilises. But we don’t believe in locking customers in during periods of difficult trading. Our approach is open and fair and our customers appreciate the clarity we provide.

Flexibility is also critical. For our international sourcing we look to multiple sources to seek out the best possible price, whilst being confident that we can secure the quality and availability customers desire.

However, during these challenging times, the UK manufacturing capability that sits right at the heart of our operation really comes into its own – as it reduces reliance on import altogether. Taking shipping rates, duties and taxes out of the picture can have a profound impact on price and makes project costing and delivery much more straightforward. Creating convenience and commercial advantage for customers really can translate to competitive advantage, taking away the headaches of supply chain disruption in relation to all their retail shop fitting needs.

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