Supply Chain Strategies in 2021

In this interview Blue Generation’s David Zipes reveals the current state of supply chains around the world  and what you can do to make sure your customers get the products they need in a timely manner.

Listen to the Interview:

 

Transcript;

Marty Hartman:
Welcome to our interview with David Zipes, who is senior vice president of production and strategic planning at Blue Generation. We are going to be talking today about supply chain strategies in 2021. David, I’m really glad that you’re able to spend some time with us today.

David Zipes:
Well Marty, thank you for having me. And this is a big topic rolling around the world right now. So hopefully I will help to shed some light on what’s really going on.

Marty Hartman:
That’s great. I mean, let’s just get right into it. I think anybody who has been ordering product that is from overseas or even within our own country has noticed that there are delays in shipping and inventory problem. It seems that supply chains are stretched to their limits right now and what do you think is causing this problem?

David Zipes:
Well, first of all it starts with the global pandemic and what’s really taken place around the world.

David Zipes:
It’s a phenomenon of disruption really from container shortages, from bringing in merchandise from overseas from all over the world, there are bottlenecks at the ports because there are worker shortages, there’s a change in demands from the consumers and what people were planning their businesses and bringing in six months ago is not necessarily what they are in need of today or those stores may be out of business or they don’t have workers at the ports to move their merchandise fast enough and then move it to the warehouses that it needs to get to when they might not have workers at the warehouse to unload these containers and return the empty container back to the port in a timely fashion. So before you even get started, there are extenuating circumstances just in manpower.

Marty Hartman:
Right.

David Zipes:
Workers are out sick due to the pandemic. CDC requirements for workers, six feet apart separation.

David Zipes:
I mean, it used to be five, six guys would go in and unload a 40 foot container. Now, it’s like back in the 1700s where they’re passing a pail of water to put out a fire and it doesn’t get there quick enough.

Marty Hartman:
Right. So I know a lot of these issues are due to the pandemic and we’ve seen that around the world things seem like they’re getting better as far as people getting back to work, but do you think this is a short term problem? Or do you think these issues are going to be with us for a while?

David Zipes:
Well, I personally think a lot of these issues are going to be with us for a while.You’re talking about a year’s worth of non-productive, productivity globally. And what you did have out there was just in such short demand or supply that if getting back online to go back into production takes time from resourcing your raw materials, to getting your workers to come back to produce it regardless if it’s apparel, home furnishings, workout equipment. The demand has shifted also where apparel is kind of on the back burner right now. And you see it at retail with the amount of stores that have gone out of business, the inventory levels that are backed up in certain stores, the fact that they don’t have new merchandise on the floor because they’re still trying to sell through the old merchandise.

David Zipes:
So you’re seeing backups across the board and getting workers to return is a very slow process. And even if a chain has 500 doors, it doesn’t necessarily mean all 500 of them are up and running to full capacity. And that trickles down to our logistics, whether it’s the warehousing, the distribution, the shipping, right down to FedEx, UPS and other carriers that are distributing merchandise all over this country. Their shipments are delayed three, four, five, 10 days even in certain areas.

Marty Hartman:
Right. So that segues into my next question. How do the supply chain issues impact Universal Unilink members?

David Zipes:
Well to start, I think the first thing that they really need to do is identify who their customers are that are up and running, what their needs are and regardless if it’s just a quick, fast track order coming out of let’s say our warehouse, or if it’s an import program that they need to plan in advance. And normally an import program could be 60 to 90 days at this point in life because of all of these backups and uncertainties. People are waiting 30 to 40 days on their imports because they don’t even know if they can get containers to bring goods into the country in a timely fashion. Boats are backed up at the ports where a boat would stop in China, pick up, go to India, and then to say, Egypt, there’s no space by the time they get to Egypt because everybody’s fighting for it.

David Zipes:
And the reverse side of all this is supply and demand, right? So where container at one point will cost you a few thousand dollars to ship from overseas to America. It’s running upwards to five, six to $8,000 for that same container, because there are so few available.

Marty Hartman:
Yeah, they’re getting in the wrong place. They’re piling up in the wrong place.

David Zipes:
And those cost increases are only going to trickle down to the consumer level at some point. Whether it’s rising oil prices, rising raw material prices, shipping pricing, all of this has got to go somewhere. So the sooner people are able to attend to their business at hand, place their orders they’re going to be in a much more secure position whether through delivery or price.

Marty Hartman:
So what are some strategies that our members could do to mitigate these supply chain issues?

David Zipes:
Well, it begins with what is available now. What can people tap into through Blue Generations inventory? Now we stock over two million units so there’s a good possibility we can cover everybody’s needs. But there are definitely shortages out there. There was a big demand for hoodies this year. We were one of the few suppliers that had full stocked inventory on them. If they know their programs and they can speak with their clients, the first thing we find is rather than just what’s the low hanging fruit in the order I can get immediately, is how does this order translate for the next three months? What are your needs going to be? And if they can get their end-user to step up and say, all right well, for the next three months we’re projecting, we’re going to need X amount of goods rather than day to day.

David Zipes:
That’s going to be the first step of secure and protection. That’s right.

Marty Hartman:
And plan ahead, as far as you possibly can with your customers. Definitely.

David Zipes:
There’s no doubt now. The reverse side of this and the good news is, look, things are opening up. Restaurant chains are, getting back and running supermarket chains, casinos, things are opening. And the demand has increased in the last few weeks by big numbers of what people are requesting and needing. And we’re feeling the positive effect of that at this point in life as well. So orders that were dragging their feet are now coming in and inventories are moving through the warehouse much quicker. So anybody that’s working on a program or knows hey, we have a 200 location chain restaurant, and we’re going to need to be prepared for this.

David Zipes:
The first thing I would do is look to see what’s in stock. The second thing I would do is say, okay, how do we import this to save bringing it in going forward? And the third thing I would look at is how do I maintain fast track delivery through as new employees onboard going forward. So that would be stock, import, stock. And it’s a real winning formula and we’ve been very successful in that.

Marty Hartman:
Yeah, that’s great. It sounds like the communication needs to be going from your customer all the way up the chain to your suppliers, making sure that you’re communicating in both directions, otherwise you’re going to get stuck.

David Zipes:
Absolutely. Often I get to speak to clients just for whatever reason that they’re calling here or I just jump on a call with people to see what’s going on and we’re digging and we’re finding a lot of information and they’re explaining to us how trends have shifted and work where apparel has not been the strongest part for them.

David Zipes:
It’s been more promotional items, which it’s so ironic that there’s so few activities out there that require promotional items. But whether it was through our sublimated gate or hoodies or our whole sublimation program, there have been pockets of business that have shifted our hoodie business increased this year where our Teflon Workshop Business decreased because there was nobody working.

Marty Hartman:
Right. Especially in the hospitality sector.

David Zipes:
Absolutely. But now that things are opening, it’s so critical that your inventory levels are stocked that your color runs are available, that your size runs are there because we don’t know who’s returning to these jobs and who that person is. And all that everybody knows is they need to be wardrobed.

Marty Hartman:
That’s exactly right. So those are great suggestions. Keep that communication going to plan ahead as far as you can. But what else would you suggest that members should do to make sure products arrive in time and the way they need to be?

David Zipes:
Well, first of all they need to, it’s important that when they work with their clients, that they have all the information upfront, where if it’s a decoration order to have the files, the colors, and to get all of that taken out of the equation. So by the time the order gets to us, we’re almost ready to go right into production. So doing the pre-production part on their end and being prepared and ready to move forward can save up to a week…The second part of this would be to know what inventory levels are available when they start soliciting programs. So they’re not running around, not able to take programs. They need to know, Hey, what does Blue Generation have in stock on style, XYZ and Blue?

David Zipes:
And now they say, Oh, that might not be enough for this client. What is my backup plan? What is the alternative, or how do I take the client forward? And not only get them to look at another style, but prepare them to continue moving forward. So those are some key facts. And knowing I’m making up a number, we have 1200 pieces in stock, 1200 pieces in production, 1200 pieces on the water, and they know they can now go out to their clients feeling secure. I can secure your business and protect your consumer or your end-user.

Marty Hartman:
And you touched on it a little bit, but Blue Generation, I know a lot of our members listening right now do what their own decorating. But you have the capability of doing the decorating right there in house, which could really trim some time off of these tight schedules.

Marty Hartman:
Can you talk a little bit about your FFRED program?

David Zipes:
Absolutely. So we are basically vertical and we have our own decoration services. So we make it even easier for clients to come to us and bring us their orders with the artwork and say, “Hey guys, I need you to produce this.” And we can save three to five days just by managing the production end for you where we don’t have to ship it to another decorator. And he has to get behind the job and start producing it. We get the order, within a day it’s already moving through the system. And you could save three to five days just by working through this program. And it’s a great program because first of all, there’s only one invoice. You don’t have to deal with a shipping to a decorator or decorator shipping to your clients or to you and having two invoices, two packing lists, it just streamlines the entire process. So there’s a lot more efficiency when you go direct and we take care of everything from beginning, middle, and end.

Marty Hartman:
Am glad you mentioned that with that vertical supply chain. And one thing that some of our members may not realize is that you have a complete custom import option also.

David Zipes:
So our import program has really taken up steam lately, especially with things reopening. And it is a great program. First of all, overseas we are completely vertical. We don’t produce anything in China. So we have no connection with what’s going on that side of the globe. We are in total control of our programs from buttons and boxes to the apparel, to the steam lines, to the shipment, to bring it into our warehouse and distributing it to our network. We are totally in control. And let me tell you, the savings coming in from overseas really makes a net impact on people’s bottom lines. Especially if you’re doing the decoration overseas, that money is better served in your pocket, or at least you getting a program that you ordinarily wouldn’t have received because you’re now competitive regardless of price, delivery, or style. You have a lot of options available to you to make these programs not only profitable, but you can go back speed to market and get back into business domestically when they just need to fill in, because what we do overseas, we do domestically. It’s a win-win.

Marty Hartman:
It is a win-win. David, I really appreciate you spending some time with us, and I hope our members have heard your messaging and take your tips to heart so that they are not caught short-handed. And they are able to serve their customers as much as they possibly can, because I really believe that right now, things are opening up all across the country. And I hope we are all poised for a great year, 2021.

David Zipes:
Well Marty, like I say in our videos, “stay tuned to Blue to see what’s new.” And I encourage the members to check out our new look book. There’s a lot of new product. There’s definitely some items out there that are going to make a net impact with their clients of things they might not have seen before or just new twists on old tried and true items. And there’s a lot of excitement from Blue Generation right now, from our marketing, from our merchandising to our brochures of what to look at and to present to their customers. So it was a fresh look. It’s a new Blue and I’m really happy to be a part of your team and the opportunity to have gotten to chat with everybody today.

Marty Hartman:
We appreciate it. Thank you very much David for your time.

David Zipes:
Bye. Thank you.