The Perfect Supply Chain Storm
Due to the global supply chain disruptions and ongoing uncertainty of goods and services in today’s world, we thought now is a good opportunity to share with you the steps Imagine This is taking to mitigate any issues and allay whatever concerns you may have.
There are two main areas of focus where Imagine This is taking extraordinary steps to eliminate these concerns with clients:
#1 Avoiding delivery issues due to longer than normal logistical delays, from production to arrival in our warehouses.
#2 Using our buying power and import expertise to minimize the impact of price increases in both manufacturing and importing.
Imagine This designs, produces and maintains it’s own products and is not dependent on 3rd party suppliers. That means you have no risk when you work with us. You get what you want when you want it, every time.
As a proactive visionary company, we are on the constant look out for industry and supply chain changes. As such, we saw early on in 2020, the potential issues and quickly pivoted and put new product manufacturing and importing processes protocols in place to deal with delays and anticipated price increases. We are happy to report, we have not missed or been late on a single promotion for our clients.
Current Supply Chain Dilemma and Active Solutions already undertaken by Imagine This:
Due to labor shortages, which have slowed normal production times and capacity, as well as longer delays in shipping and off-loading goods in both foreign and domestic ports, we increased our previous import window of 4-5 months to 7 months in late 2020. Seeing these delays grow longer in early 2021, we increased our import window to 8-10 months as a proactive approach to make sure our clients’ promotions would be protected.
We also increased our overall inventory position to be able to support the returning growth for existing and new clients. While we rotate through more than $100 million in inventory annually, we keep an average of $50 million on hand and ready to ship.
Our clients simply love our hassle-free ordering system. We still offer our easy, “right to cancel any order that has not shipped to you yet” approach.
This was especially handy for our Continuity Gift Program clients during the lockdowns of 2020 and slow restarts in 2021. Our clients were not burdened with costs for product they did not need and when they re-started, we shipped only what they needed. That’s right. Our clients don’t get stuck with product they don’t need.
This is a huge benefit to our clients financially and logistically. It is an advantage only Imagine This offers.
Primary Supply Chain Issues
Below is a summary of the primary supply chain issues causing delays and price increases. You can call it the conditions that made for the “Perfect Supply Chain Storm”. Experts predict an easing of this disruption by late 2022 to early 2023. In the meantime, Imagine This will continue to monitor the situation and adjust accordingly to ensure reliable deliverables.
#1 Container Shortage
There is a massive shortage of containers in China, coupled with less, ready-to-go cargo ships, as they are delayed in US Ports due to smaller, COVID related workforces. This continues to cause a backlog of goods that are already produced, but unable to get placed on ships in the usual timeframe.
Freight drivers are making less trips to and from the ports, which is increasing the number of containers waiting to be picked up. In addition, chassis are in short supply, so even when product is offloaded, it can sit for weeks before it is able to be picked up and delivered to warehouses. As the shipyards container capacities reach their limits, ships are offloaded slower, creating a further back up.
#3 Port Labor
Crane Operators in ports require experience, which is a physically demanding job to boot. Over the past 12 months, there has been a significant increase in Crane Operators retiring, leaving a shortage of operators for all the cranes in various ports. This means ships are offloaded at a slower pace.
#4 Port Backlog
Ships waiting much longer than usual times to offload has resulted in a shipping and container shortage in China, which means freight forwarders and shipping companies can charge a lot more to companies trying to get their products. The effect on container prices have soared from $2,500 in 2019 to peaking recently at over $18,000 per container. Although rates have begun to lower in the last month, they are still far above historical rates.
#5 Warehouse Capacity
Domestic warehouse prices have risen as demand for space to hold product is at an all-time high. Some containers remain in port, as they lack warehouse space to receive them. With our long-term relationships and volume, the Imagine This Inventory Management Team has been able to minimize the impact of these increases.
#6 Manufacturing Costs
Increases in raw materials and labor has spiked. This is not new. For the past 2 decades, prices for both have increased annually, but at a much slower pace than the past 12 months. Imagine This uses its buying power of over $100 million in annual purchases to leverage the best prices with its vetted factories.
#7 Last Mile Shipping
Domestic shipping rates, from a U.S. based warehouse to client’s property, have also risen sharply due to less drivers and chassis being available. Imagine This works to mitigate some of the price increases by competitively bidding shipping to a minimum of 3 shippers for each job. Of course, we do our best to use reliable and vetted shippers. Our in-house staff works diligently to make sure our client’s shipments arrive smoothly and on time, so their Warehouse Team is ready for us well in advance.
Imagine This will not lower the quality levels of its product or packaging, so the Development Team constantly explores ways to create product mixes that are, overall, more cost effective, while preserving perceived value. This is a key ingredient to assuring every current and future promotion is successful.
We hope you find this information helpful. We want you to rest assured our goal is to put you in the safest and most cost-effective position possible.
Please feel free to reach out to us if you want any further information or support.