2020-12-18
Newsletter Procurement, Supply and Logistics Market situation​ - RMI / Currency / Freight Procurement and Supply - COGS/KPI - Tenders/projects (Supplier- customers) Suppliers news Other activities
Market Situation Raw materials Covid 19 has affected the global economy accelerating development of some sectors (ecommerce, pharmaceuticals, homing… with strong focus on sustainability and digitalization. This has lead to an unbalance market of raw materials where demand is very high.
We see in Q4 the pressure increase on Raw materials availability as production and supply chain is limited and contrating with high demand. Timber is at its higher price level in history. Stocks are non existing and supply chain is at risk. We expect this trend to continue in the coming months and will continue Q1 2021. Market is acting with major players increasing prices between 5% and 15%. Despite the good job from procurement some of those will affect Boxon during 2021. Corrugated board has fluctuated a lot during 2020. As demand has exploded in Q4 driven mainly by e-commerce, prices are following. Manufacturers are now talking about increasing prices to the market during Q1. We count on a moderate impact for Boxon but expect some price adjustments in feb/march. We see the same trend with PE and PP materials since summertime prices have been raising very quickly and a peek is expected in January. E-commerce, hygiene, food industry, restocking before Brexit…are some of the factors contributing. Our prices are being adjusted on a monthly basis and will reduce our margins instantly. We have been predicted 2021 will be a challenging year for our procurement team.
Currency During the second half of the year, currency levels are evolving in a quite favourable way for Boxon. EUR is stronger vs. USD supporting our sourcing from India. SEK is stronger vs EUR supporting our sourcing from Euro zone countries. NOK vs EUR is also improving but remains very high. Note: Raw materials fluctuations in a global market can be faded out our accelerated depending on the exchanges rates evolution.
Freight Sea Currently we are facing a tough time for seafreights ex Far East. (India, China, etc.) Due to pandemic situation and lack of export to Far East there is an equipment shortage(40’HQ). Especially in India there is a huge problem, due to carriers repositioning equipment in higher paying markets such as China, Vietnam and Indonesia. Carriers from THE Alliance and 2M have announced a new series of blanked sailings between Asia and Europe, so there are possibilities of container getting rolled over to next vessels. Carriers also reported full bookings till end of December. Road The fuel surcharge are remaining low. Regional signals of capacity limitation in Europe due to christmast but at this point no forseen effect on the flows related to Boxon.
Activities
Tenders /Benchmark/ price reviews STRAPPING – preparation ready Edge protectors – tender closed- implementation Jan 21 Smurfit Kappa SE – Standard range –benchmark Bulk Standard range - preparing tender Packaging tape – preparing tender Projects Assortment Segmentation of Technical Tapes – on going Development tall oil range Alternative multisourcing to asia LDPE- Cirlular economy project Megatrailers evaluation
Customer tenders: Bagaren & Kocken- offering Outnorth – offering Kids – on going Hemtex – on going Partykung- on going Finja- WIN Carlsberg- WIN
Cost Price Avoidance: over 72% YTD
Projects Carpet Vista – sustainability and efficiency project- on going Pallet under goods new set up- evaluation Pallet exchange project- closed dec 1st!
Info/News Our two new HUBs in EMEA, Bratislava and Bilbao, are running since November. The sites are set up for Volvo assortments and the outbound is managed but EMEA logistics. The inbound flow is steered from the Nordics and is still under tuning to get even better. To support growth at Boxon our main warehouses need a system support, a Warehouse management system (WMS). The process to select the most suitable WMS provider has been running for several month and the best match will be selected in December 2020.
Supply chain challenges Surviving Black Friday Many suppliers are still struggling with delivery time due to an increasing demand of products used for e-commerce packaging. The Covid19-situation has transferred the traditional shopping behavior to online-shopping instead. Strict security routines also slows down the production capabilities. All these things together have put pressure on the total supply chain including transports. This trend will probably continue during Q1 and we therefore do our best to avoid problems and implement necessary actions to secure the future supply. Suppliers for bulkbags (FIBC’s) from all production countries are close to full capacity, so from a capacity viewpoint there are no issues. The main problem is the availability of containers in India and as a result the booming freight prices. At the same time RM-prices are strongly increasing and suppliers give short validity on offers. Price validity on customer specific articles We have a number of articles customer specific with a price validity of 30 days or lower. Ths is due to the fact that the suppliers cannot guarantee the price on a long period. We see many benefits in having a longer price stability in our business and work actively with
the suppliers to achieve that. 30 suppliers were moved to fixed prices From December 1st, increase therefore speed in the ordering /Purchasing process. Standard Operations procedure Updating Boxon SOP to our suppliers with the new information regarding flows to new hubs and new contact surfaces. This will be implemented 2021, and a lot of focus will be on order and communication flow to go as smooth as possible.
Suppliers New suppliers Smurfit Kappa Spain - (corrugated board) under implem. Pentarom Romania - (wooden products) testing phase Organization From January 4th we will reinforce our SMS team. We are looking forward to it! From January also C&D will be integrated in the Procurement team. No major change in the way of working, Boxon will benefit of having our designers closer to the manufacturers. Teamwork = success Recently we won a big tender with Carlsberg on stretch film. On this Tender sales, procurement and supplier have worked very close together and thanks to an open dialogue between all parties where all competence has been used, every relevant parameter has been discussed and taken under consideration. From raw material and currency index and history, to consignation stock and production forecasts in addition to knowledge about customer and our competitors. This all together made us the best supplier for the whole Nordic region despite competition from producers directly! Procurement and supply are finalizing preparations to Brexit in close dialog with sales.