Packaging in the Midst of COVID-19: Supply Chain Challenges

The COVID-19 “black swan” event was thrusted upon us with little time to prepare and plan. Thankfully, Nosco has been able to successfully operate the business and manage its supply chain in this new environment through the use of:

• Business Continuity Plans and Tools: A robust ERP system with electronic inventory requirements has been critical for remote location management. This is due to the fact that manual inventory transactions / job tickets, and physical counts would have impeded effectiveness. Additionally, virtual conference capabilities, with data exchange, have become the norm for conducting production planning.
  
  
• Supply Chain Risk Management Tactics: Balanced programs that account for both effective working capital management and supply chain avoidance disruption have been critical to understanding relationships in the manufacturing of sourced products. As such, Nosco has already established “make and hold” agreements for much of our face-stock for pressure-sensitive labels.

• Long-Standing Supplier Relationships: Due to our long-standing relationships, Nosco has been identified as a “preferred” customer by many major suppliers for board, paper and label substrates. This has allowed us to serve 26+ customers whose products are combating the COVID-19 pandemic. This has been made possible through dual-sourcing for all major paper and board requirements – predominately with North American companies. We were also able to gain additional quantities of materials, which went on allocation due to our close relationship with key suppliers. This allowed us to support early increased demands.
  

• Product Breadth and Site Redundancy: The size and breadth of a company are both key attributes for successfully managing the unpredictable nature of a “black swan” event, such as the COVID-19 pandemic. At Nosco, multiple locations with production redundancy, ample capacity and advanced data systems has helped us mitigate labor absenteeism and customer volume surges. Companies with single points of failure will struggle as COVID-19 further settles into our labor force, impacting supply chains.

Overall, we are in uncharted waters and must tread carefully moving forward. In the near-term, the market outlook shows:

• A return to normal market demand for paper and board stock.
• Stabilized label demand after the initial 30% market surge in March and April.
• Pharmaceutical packaging requirements will likely stay strong through the balance of 2020 due to COVID-19 support.
• Material availability will come back in the months to come with unlikely price inflation.