Resin Roulette: How Betting on a Single Supplier Can Be a Losing Game
The old adage about putting all your eggs in one basket certainly applies to supply chains. Betting on a single resin supplier increases risk and volatility, while depriving converters of key benefits too. Let’s explore.
When it comes to resin supply, spread your bets
Resilience and adaptability are key to long-term success and growth in the plastics industry.
Relying too heavily on a single supplier can be a strategic mistake that disrupts operations and risks being unable to meet customer demands.
Converters should consider balancing their supply chains to avoid unnecessary problems. The need for supply-chain diversity has only grown stronger.
For example, major weather events have increased in intensity in recent decades.1 2 This poses an increased risk of operational and supply disruptions.
Why a multi-supplier approach?
Converters seek the best possible supply arrangements to suit their needs. Larger operations likely have multiple suppliers, and are regularly seeking to balance that roster to adapt to market shifts and other changes. Some smaller converters may have a sole supplier.
In either case, it’s a good idea to consider diversifying your options.
Having a reliable pool of resin suppliers offers significant benefits:
Mitigating supply disruptions: Storm intensity has increased the potential for force majeure events and other supply chain disruptions. These supplier slowdowns can leave your team short of the resin needed to satisfy customer orders. With multiple suppliers, converters can quickly pivot to alternative sources from unaffected regions, ensuring an uninterrupted resin supply.
Price stability: Resin pricing differs across suppliers, and is based on factors such as market conditions, oil prices, location, and production costs. Having multiple supply sources gives converters some negotiating leverage, allowing them to seek the most competitive pricing and lower their procurement costs.
The cost of doing nothing
A lot can go wrong when relying on a sole supplier to deliver the lifeblood of your business on time:
Higher material costs: When a supplier can’t deliver what’s expected, converters may be forced to turn to the spot market, where resin prices are often higher than contracted rates. This is due to price volatility, unpredictability, and the absence of volume discounts found in typical supplier contracts.
Inflexibility: Depending on one resin source can make it challenging to adapt to changes in market trends, limiting growth and competitiveness.
Unreliable quality and consistency: If your sole supplier struggles to deliver resin to consistent quality specs, you won’t have a backup supplier on deck to help overcome the disruption that creates.
Limited access to new materials: A single supplier may not offer the latest materials or innovations, causing converters to miss out on new opportunities or technological advancements.
Address Supply Chain Challenges Today
Timely status updates, technical expertise, and GPS tracking are just a few examples of what you’ll learn about in this free eBook.
Why Shell Polymers belongs in your supply chain
Convinced that you need to diversify your resin supply chain? That’s great. Now what?
There are many suppliers out there willing to make you a customer. But they aren’t all created equal.
Here’s why you should give Shell Polymers a closer look:
Deliberate location: We built our brand new polyethylene plant in Monaca, Pennsylvania, to be closer to converters. The facility lies within 700 miles of the majority of North American polyethylene demand.
Designed to stay running: The plant features a weather-resistant design and preventive maintenance processes that promote reliable uptime. While Pennsylvania isn’t immune from severe weather, our Customer Relationship Coordinators (CRCs) will proactively communicate with customers if and when an issue arises.
Multimodal options: We can ship polyethylene by truck or rail, and we designed our loading and cleaning infrastructure to ensure our shipments go out quickly and maintain quality.
Easy order tracking: Every one of our rail cars is equipped with a GPS unit. This helps converters check where their next shipment is at any time of day.
Open communication: The Shell Polymers team is committed to listening to our customers and helping meet their needs. Through this (Real)ationship approach, our people and our technology help converters stay up-to-date on where their next shipment is, and we take action based on customer feedback to make operations smoother and easier.
Quality at every step: Quality testing during production and molecular analysis and troubleshooting in our labs and Application Hall all help to ensure resin batches are consistent from one shipment to the next.
Interested in optimizing your supplier roster? Reach out to our team today to discuss how we can help.