Manufacturers have faced a wide range of supply chain issues as we emerge from the COVID-19 pandemic. Shortages of raw materials, port closures, and shipping delays are a few that have grabbed plenty of headlines. There is little doubt that weaknesses in our global supply chain have been exposed.
So how does this affect a producer of molded rubber parts like Molded Dimensions?
According Molded Dimensions’ in-house Chemist, Tony Lukas, two things are painfully apparent in the world of raw materials for molded parts these days: Global supply is way short of demand and price increases are fast and furious.
Some additional background as to why may help. China is the main supplier of many of the polymers and materials needed for providers like Molded Dimensions to make most of the rubber compounds. The Chinese government has instituted rolling blackouts to improve air quality in time for the coming February’s 2022 Winter Olympics in Beijing. This power curtailment has resulted in silicon metal mining and chemical plants being shut down, causing shortages and allocations of the coveted silicone polymer.
Adding to the supply shortage is competitive demand, primarily from the electrification trend. A fluoroelastomer precursor is being diverted to lithium batteries instead of being used to make FKM polymers. With electric vehicle sales booming, battery production and demand have as well.
Tony Lukas added, “In my 30-years in this industry, the price increases and supply issues we are experiencing are unprecedented. This looks to be a long-term issue and sitting back until matters improve would be a dangerous strategy.”
What is Molded Dimensions doing about it?
Price increases are flowing downstream from the raw materials producers, to processors, to shippers and in time, manufacturers including Molded Dimensions. These are factors outside of their control, but they have identified five responses to improve the current situation:
- Strong supplier relationships — With demand outpacing supply, lean on and strengthen the supply chain relationships they have built.
- Reformulate where you can — Utilize resources like having an in-house chemist to develop alternative formulations.
- Improve forecasting capabilities — Better understand customer demand to address volatility.
- Adjust purchasing and inventory control — Improve approach to inventory management to account for market volatility.
- Be proactive with customers — Improve frequency of communications to customers and remain upfront about challenges.
There is a myriad of moving parts to addressing the supply chain crisis, but Molded Dimensions continues to improve their position with suppliers with a goal of meeting our customer’s needs. Unprecedented times indeed.