What’s going to go out-of-control in the retail supply chain next?
For now, it’s the skyrocketing prices of resin. Each of the five types of commodity resin have had their prices continue to march steadily upward.
But this isn’t all driven by COVID.
The polar vortex that caused plummeting temperatures in February also played a role. Refineries in warm areas of the country (Texas and Louisiana specifically) aren’t prepared for cold temperature extremes. And as a result, they’ve experienced disruptions to their operations, which has also influenced resin prices.
You don’t have to feel helpless about the situation. Here’s how you can protect yourself from skyrocketing resin prices:
1. Write Tighter Contracts
Plastics Technology Online wrote a fascinating article on controlling resin costs.
They quoted Bill Bowie, COO of Resin Technology, Inc., a materials costs consulting firm, as saying,”The best buyers in the world do it that way.”
He was referring to sitting down and negotiating with resin manufacturers on a monthly basis.
He suggested that many negotiations begin with price indexes. However, those are only a starting point.
Typically, from there both sides agree to a discount.
2. Pass Price Increases on to Customers
We get it. It’s difficult to do this. And if big-box retailers sell your product, they may want nothing to do with your proposed price increases.
Still, at minimum, talk with big-box retailers and at least see what they think.
If that route doesn’t work, you could also find less expensive raw materials and offer consumers alternative products.
You may also need to get extremely creative. Add more value to your products so customers are more willing to pay higher prices.
For example, you might design an amazing gift box if you have an item consumers love giving as a gift. They’ll pay more for the convenience of the gift box…and even noticeably more than the cost of the materials for the box and product.
3. Explore Alternative Materials
Now may be the time to move to greener materials, which opens up a whole new market segment for you if you mostly use plastic resin.
For example, agricultural film and mixed recycled plastics from municipalities are available in abundance…and not many US companies can use either.
So, you have low, steady prices consistently available to you.
Those particular recycled options may or may not be of use to you. But you get the point of the story.
Rising resin prices don’t need to be a major disruptor for you. And now you have some simple strategies for decreasing the effect of them.