Is there any material consumers buy en masse that isn’t experiencing at least some increase in price?
COVID-19 has disrupted almost every last aspect of the supply chain.
Plus, you have the price of oil increasing so far this year, which has also driven up the costs of resin a little also.
Fortunately, there’s plenty you can do about those rising costs. Here’s what to focus on:
1. Work with Distributors Who Understand Your Company
When it comes to sales, you have pre-designed packages that everyone gets, and then you have companies who take the time to understand your specific needs and work with you to create a win-win relationship.
If you’re not getting help from your current distributor, and you feel like they don’t understand your business, maybe it’s time to make a change.
For example, you may work with a distributor who offers just-in-time supply, which keeps your overhead costs related to resin management in check.
Your situation is unique. So you’ll know when you have a resin distributor who meets your needs.
2. Hold on and Hope
“Hope” is never the strategy that you want to hear about in business. But with plastic resin prices screaming to record levels recently, it could be your only choice.
Though polyethylene prices haven’t been as high as those of some of the other plastic resins, additional supply has now started to flow toward the US.
A fire destroyed the Pemax plant in Mexico, but that should be fully repaired and operational again in the coming months.
Brazilian plastics maker Braskem Idesa has also gained a notable supply of ethane, which will further increase the PE supply.
Experts also believe recovery from the recent blows to the industry (brought about by the absurdly cold weather) will begin to arrive in the second quarter here.
Hope’s not the ideal strategy. But in this case, it may work.
3. Present Yourself as a Potential Long-Term Customer
Plastics distributors right now are most willing to work with long-term loyal customers, and companies who want to become such.
We’re not saying you should deceive your distributors. Typically, long-term relationships become the most fruitful for both parties.
Now may be the time to make a change or make a stronger commitment to your existing plastics distributor.
4. Put Just a Single Employee in Charge of Purchasing
If you’ve been purchasing resins for any length of time, you know that buying is about relationships, not leverage.
You can also more easily coordinate shipments to reduce freight costs this way.
Having multiple people buy from multiple suppliers weakens the strength of your relationships. And the inevitable outcome is that you end up paying more in an already expensive market.
It may be difficult and wearing, but when you have just a single person in charge of purchasing resin, that gives you the best opportunity to keep your costs under control.
And in this market, every little bit you can get makes a big difference.
It’s not easy in this resins market. But you can keep your costs in check. And recovery in the supply is on the horizon.
Hang in there and use these tips to your advantage to keep yourself competitive.