The past three years were challenging for many businesses, including New Berlin Plastics: a global pandemic, a major winter storm that knocked resin producers offline, followed by an unprecedented spike in demand as the U.S. economy came roaring back from the pandemic.
Now that its supply chain has begun to stabilize and these “black swan” events are more in the rearview mirror, the New Berlin Plastics team is taking steps to ensure that no matter what happens next, the company will be resilient and adaptable.
“We’re working hard to identify and control everything that we can control and mitigate the risk from the things we can’t,” explains Business Development Manager Karl Held. “The events of the last three years have convinced us that we need to upgrade our systems and processes so that, no matter what comes next, we can manage it effectively.”
NBP Senior Buyer Michael Fant is relieved that resin availability is returning to normal after several years of shortages. Resin producers have added capacity and demand has leveled off after last year’s post-COVID spike. To ensure that NBP can get the resin it needs to meet customer demand, he has strengthened his relationships with key resin suppliers.
“We’re sharing demand forecasts with our suppliers and are having regular conversations with them to make sure we can get the material we need on a timely basis. That enables them to forecast and plan their raw material acquisition and production accordingly,” he says. NBP also tracks and reviews supplier performance data to ensure that their actual delivery dates match those they’ve promised.
NBP’s Sales, Inventory & Operations Planning (SIOP) team meets weekly to analyze supply and demand. Team members have also been visiting its major resin suppliers to see their operations firsthand, uncover any pain points they may have, and learn how it can work more effectively with them.
“For example, one of our suppliers uses an outside supplier for bulk transport of their resins. On average, they need a week to order and schedule trucks. Now that we know that we can plan accordingly,” Fant points out. “That level of transparency has made a big difference in helping us do a better job of matching supply and demand, as well as more effectively managing our inventory levels,” he adds.
Recent investments in NBP’s physical plant are helping the company to manage its resin inventory. “We recently added a second silo to Building 1. It enables us to increase our safety stock for that particular resin and gives us some buffer room. That way we’re not as dependent on bulk trucks arriving on time or having to overfill our first silo,” Fant points out.
Building 2 also provides some relief, as needed. “If good deals come up on spot purchases of certain resins, we can store them there. But in general, we’re still working toward matching our resin inventory closely to our production needs,” he adds.
Dan Seifert is responsible for the procurement of metal inserts and other non-resin products. He’s seen a bigger swing in the availability of parts compared to the resin side of the business.
“Most of our customers have specific custom inserts they want to use in their parts. Many of them are sourced from overseas, which resulted in lead times of up to a year. Lead times from domestic suppliers were also extended. Fortunately, things are now starting to normalize,” he notes. Overseas inserts are averaging 30-32 weeks, close to pre-pandemic levels. While lead times for inserts are improving, the fact that some items need to be purchased at a six month supply highlights the value of working with a financially strong supplier who is able to carry those costs for its customers.
As part of NBP’s drive to reduce inventory costs, Seifert has been working with insert suppliers to “right-size” orders so inserts arrive as needed, not in large bulk quantities. “Most of our suppliers have been pretty receptive to our need to adjust our orders to help us better match inventory to demand,” he adds.
Like Fant, Seifert is communicating more frequently and sharing forecasts with his suppliers so they can do a better job of meeting NBP’s growing needs.
Improving business intelligence
In addition to more closely managing its critical supply chain relationships, New Berlin Plastics is exploring investing in business intelligence software. “Our goal is to feed it all of our supply and demand data, inventory, forecasts, and scheduling and use it to deliver actionable insights to us,” Held reveals. “It will help us see patterns and predict events that may happen so we can anticipate them and respond with greater agility.”
“For example, based on a customer’s past pattern of orders, we could see if their behavior is deviating from what we would expect. It will alert us earlier so we can have a conversation with them. If we can confirm that they are reducing their demand compared to their forecast or previous order behavior, we may be able to cancel or adjust raw material orders – which we wouldn’t be able to do as quickly without the insights a business intelligence platform provides,” he adds.
Whatever happens next, New Berlin Plastics will be ready for it.