When thinking about how to onshore, store and buy packaging supplies in today's climate, you have a lot to consider. The status quo for these items five years ago is not what they are today.
Due to ongoing supply chain problems, including disruption within the oil industry as a byproduct of the war in Ukraine, many businesses are chomping at the bit to rethink how they onshore, store, and buy packaging supplies.
However, there is more to this story than the never-ending issues with the supply chain that are getting more complicated by the day.
The tariffs imposed on China by the Biden administration are further complicating an already stressed global supply chain.
These stressors force many companies to turn to sourcing their packaging supplies both internationally and domestically to drive higher local inventories.
But, what are the benefits of doing this? What factors are driving these decisions? Are these the right actions for your business to mimic at this time in the history of our world?
Today's article will explore the factors that have led to a re-imagining of onshoring, storage, and purchasing practices for packaging supplies inventory for many businesses across the country.
Today's Protocols To Onshore, Store, And Buy Packaging Supplies
Five to ten years ago, the process for onshoring and storing packaging supplies was very different from today. Back then, many companies were primarily looking to purchase the most affordable packaging supplies of good quality as possible.
Many companies bought from suppliers overseas as their price points were significantly lower than many domestic, USA-made supplies.
Additionally, packaging supplies inventories kept in-house for many businesses were lower than we are finding them to be in our modern-day world.
Today, however, things are very different. Companies everywhere are simultaneously trying to buy local and American-made packaging supplies while at the same time trying to supplement those purchases with supplies orders from overseas, including places like China.
While that may seem counterintuitive, this is happening as more extensive inventories of packaging supplies are required for many companies to navigate shortages due to global supply chain problems.
Onshoring, Storing, And Buying Packaging Supplies In Light Of Chinese Tariffs
With the 25% increase on tariffs currently being imposed on China, what people are doing now, or at least what they're looking to do, is bringing pieces of manufacturing back to the United States.
This is due to issues with ease of access to packaging supplies which have been compounded by supply chain disruptions such as higher shipping costs, delays, and other problems associated with items like blank sailings and container ships sitting in ports for weeks not being unloaded.
In addition to similar items causing further supply chain disruption, including the war in Ukraine, the national trucker protests and labor shortages, and the continued backlog of orders from the pandemic, the supply chain is very fractured right now.
So getting packaging supplies as close to home as possible is becoming more and more critical. This is even more important than the higher cost you're willing to pay for them in many cases.
Right now, most businesses are more concerned with simply having access to packaging supplies to keep their inventories stocked at the required levels to meet the demand of their clients.
So when we are talking about new onshoring protocols for packaging supplies in today's climate, what people are doing is twofold.
One, they are not only buying made in the USA packaging supplies, but they are buying more inventory than usual and storing those more extensive inventories locally in their own warehouses.
Secondly, to supplement these increased inventory needs, people are also buying more from overseas in an effort to get more significant inventories onshore domestically.
By buying significantly more packaging supplies from overseas and then storing them closer to home, you're going to pay a higher premium because you're bringing more over.
But this practice breaks negates that feeling that "I'm going to run out of packaging supplies inventory."
With the onshoring aspect of it, the goal is to remove the sting of those tariffs, fees, and penalties and increase the speed of the supply chain.
So, to counter these problems and ensure you have the proper inventory to meet customer demand, you buy significantly more packaging supplies and pay the tariff price, but keep it closer to home.
Top Considerations When You Onshore, Store, And Buy Packaging Supplies
There are many things to consider when thinking about the proper onshoring, storing, and buying of packaging supplies in today's climate.
But, some items of consideration should be top of mind as you attempt to navigate the complexities of modern packaging supply onshoring, storing, and buying practices.
Below, we will review these essential items of consideration so that you can integrate these ideas into your approach to these modern-day issues.
Lead Times When You Onshore, Store, And Buy Packaging Supplies
When beginning to analyze the critical considerations about modern packaging supplies buying, onshoring, and storing protocols, the first thing you really need to think about, first and foremost, is lead times.
Suppose the point of changing your processes for onshoring, storing, and buying packaging supplies is to generate the required level of inventory as quickly as possible to meet the demand of your customers. In that case, long lead times will be your worst nightmare.
So, it is crucial that you determine your lead times for both the domestic and international packaging supply vendors you are ordering from.
Some packaging supplies made from plastic, paper, cardboard, and other popular packaging materials come with borderline excessive lead times in today's world.
Lead times for certain packaging supplies are hitting anywhere from seven weeks to seven months. So, it is vital that you find out the lead times for the packaging materials you will be ordering to ensure you can get what you need.
In some cases, you may have to consider switching to a different type of packaging supply depending on the inventory required to meet your customer's demands.
Dependability Of Offshore Manufacturers Of Your Packaging Supplies
The next thing you have to consider when planning for modifications to onshoring, storing, and buying packaging supplies is the dependability of your offshore packaging materials manufacturers.
Some countries were completely shut down during the pandemic for seven months or more. For example, during the pandemic, Vietnam was shut down for a full seven months due to COVID issues.
There wasn't a container ship that left Vietnam for seven months. So if you were buying from a Vietnamese packaging supplies manufacturer offshore, you didn't see anything for seven months.
That is why you need to understand the political climate of the area you're buying from and the very limited geography of your vendor's location. As things continue to tighten up in our global economy, you need to think about what that population looks like and how reliable it will be.
You need to understand how long it will take to get what you need from your suppliers. And, if they cannot provide you with the service and lead times you need, you will want to seriously consider purchasing your packaging supplies elsewhere.
The True Cost To Onshore, Store, And Buy Packaging Supplies Today
When thinking about the proper onshoring, storing, and buying of your packaging supplies, the cost of your packaging is obviously going to be something you consider.
But, you need to make sure you understand the actual and total costs related to these elements of your business. For example, let's say you sell bottled water.
It's effortless to say that I can buy this water bottle for a penny!
But after that, you then have to ship it across the ocean. What does that cost? You then have to pay the tariffs. What does that cost?
Next, you have to pay the international freight fees to get it from the port to your warehouse. You have to factor in all associated costs when thinking about onshoring your packaging supplies. And it is easy to overlook these items during this process.
Here at Industrial Packaging, we like to call this item of consideration the fully loaded cost. And to know what that is, you have to be sure to answer a fundamental question.
And that question is, "what does it actually cost you to get that product made internationally and back into your warehouse? At the end of the day, it is imperative that you completely understand what your fully loaded cost will be.
The Opportunity Cost To Onshore, Store, And Buy Packaging Supplies
The next thing you need to understand when figuring out your current day onshoring, storing, and purchasing of packaging supplies protocols is your opportunity cost.
In the theory of microeconomics, an opportunity cost is the deficit of possible gains from alternative choices when one option is chosen over another.
We would like you to understand that if you are currently buying exclusively from overseas, then buying stateside would be your opportunity cost.
So, if you can buy your packaging supplies stateside, what would your opportunity cost be? Are there other things you can buy stateside with a USA-based manufacturer that you can bundle to get better pricing?
Essentially, you want to figure out the non-tangible benefits of your opportunity costs so that you can choose the appropriate option for your needs, as your current choice may not be the best one for your company.
Onshore, Store, And Buy Packaging Made In America: The Feel Good Factor
If you buy American-made, you feel good, right? When you buy products made in America, you are helping to create and sustain US-based jobs.
You are helping your local economy. And for most American business owners, that is a total positive. So you want to do that as much as humanly possible as long as it's advantageous for your business.
When you can achieve supporting American businesses while optimizing how you onshore, store and buy packaging supplies for your company, we call that the feel-good factor.
Onshoring, Storing, And Buying Packaging Supplies As A Trend Today
These new ways in which many businesses choose to onshore, store and buy packaging supplies today are a unique and rising trend.
We are seeing more of these habits today. Whether it becomes a significant swing in which 70% or more of manufacturing is brought back to the US, we cannot say for sure.
While we just don't know if the cost offsets will be there to continue the rise of this trend, we can confirm that we as a company are seeing these new habits happening more and more as we get deeper into 2022.
Need Help To Onshore, Store, And Buy Packaging Supplies For Your Business?
If you are new to the changing ways these things are happening today, you are not alone. When shifting how you onshore, store, and buy packaging supplies for your business, there is much to consider.
And it can be challenging to make these changes on your own accord. Would you like help to find new ways to onshore, store, and buy packaging supplies for your business?
Please consider speaking with one of our packaging specialists if you say yes. They will be able to help you achieve these goals for your company.
