Inflation rates, supply chain issues and producer price index have reached staggering heights and continue to create riptide challenges for producers and consumers alike. Navigating these uncharted and often turbulent waters can be difficult and frustrating for us all. At Bore Tide One Source, we’ve been tracking the constantly evolving challenges surrounding print and promotional product needs, to ensure we can provide you with the best solutions.
We want to keep you informed and provide you with the transparency of producer and consumer that you deserve.
Last October, we discussed the global supply chain challenges and the struggle to meet demand with low inventory levels. Although those problems are still impacting the print and promotional product world today, inflation continues to persist–adding unique and ongoing challenges.
Beneath the Surface
Getting started, let’s go over the basics. Firstly, there are two indexes that economists and suppliers look at. There is the CPI (consumer price index) and PPI (producer price index).
While CPI is the main index you will most often hear referenced since this particular index reflects the consumer directly, PPI relates to year-over-year cost differences it takes to produce “X” products.
PPI is currently the most turbulent to swim through in our current economy. As of June 2022, the PPI was even higher than the CPI (9.1% in June). The current PPI is close to 12% higher than last year.
What does that mean? Producers are eating the difference. This is unsustainable, and producers and consumers are reeling from its effects.
Diving into Inflation
Of any country in the Group of Seven advanced economies, the U.S has one of the highest inflation rates in the world. In the Summer of 2022, we saw rates of 9.1% –marking the highest increase since January, 1982.
Stemming from a high demand from consumers, inflation has been largely driven by high government spending in an attempt to shield households and businesses from the turbulent economic impacts of the pandemic.
The result is known as “demand push inflation”, wherein a lack of supply to meet demands of the consumer pushes prices to staggering levels. As money went into households, spending continued–but supply chains still struggled. Labor shortages, delays in shipping and continued surging consumer demand have exacerbated rates–leading to frustration and distrust from consumers to producers.
The ongoing effects of Covid-19, higher food prices as a result of catastrophic storms, droughts and damaged harvests have also contributed to rising prices.
Treading the Waters of Supply Chain
An equal frustration for consumers in 2022 has been supply chain issues. Chain bottlenecks have developed as ports and cities shut down and reopen to combat Covid-19. As companies shift to make their products in other countries while dealing with rising raw material costs, delayed delivery time and price have increased.
The Impact on You
Inflation can be tough to combat–but there are ways around it! For example, for the past year we’ve been working with a client on a direct mail campaign. The program should be somewhat predictable, as the mailer’s components stay the same per quarter and the address list changes. Expecting a slight price increase on items as the years go on is normal–but not to the great lengths it reached on a recent Q3 mailer.
Part of our Q3 mailer was a long sleeve, 100% cotton shirt, which increased significantly from 2021 by almost 40%. This increase was a huge shock to our client, and we worked with them to reach a solution that would soften the sting of these effects.
By changing the t-shirt to a more athletic style, and embracing an option for a 50% cotton and 50% polyester blend, we were able to not only help our client combat inflation, but allow them to keep the particular mailer within their budget as well.
The price of cotton is one of the most notable increases in the last year, as cotton prices hit a ten-year high in October, 2021. Higher costs are obviously not just affecting producers, but are also reaching consumers. The 47% price increase has been a direct result of cotton import bans on China, which has forced Chinese companies to buy U.S cotton, ship to China to manufacture, and then route back to the United States.
Additionally, the ongoing effects of climate change–seen in droughts, heat waves and extreme weather–have also contributed to the lack of cotton output on a global scale. Companies like HanesBrands (a company known for its cotton t-shirt) have hiked the prices of cotton goods in order to compensate for commodity and material stresses.
How to Navigate the Turbulent Waters
While these ongoing issues continue to reach businesses and consumers worldwide, the Federal Reserve Bank predicts that this inflation rate will eventually drop. Experts stress that inflation is a natural part of the economy and that within a matter of time, things should return to a more steady rate.
However, we can’t just wait around for inflation to decrease and supply chain issues to subside–the show must go on! The good news is, we have found 3 key tips to tackle inflation and supply chain issues head-on, while we wait for more steady rates.
Start Early
Start early to get ahead of inflation and supply issues. This means that whenever possible, order as early as possible! Giving yourself more time allows you to review pricing and find quality items suited for you, while giving your timeline the flexibility it needs.
Economists do not predict a timely shift in the market. The present reality is that we are living with inflation, low inventory levels and supply chain issues–so let’s make the most of it and give ourselves time to adjust when these daunting issues pop up.
Remain Flexible
In the example above, cotton had historically been viewed as a “premium” material, so the transition to new material understandably carried with it a question of quality. With our client remaining open to alternative solutions, we were able to find a more economical material.
With inflation and supply chain issues, making a backup plan or being ready to pivot in these scenarios is crucial. Although we hope adjusting your original order ideas is a “worst case” scenario, we want you to be prepared, as anything is possible in the new inflation/supply chain issue world we live in.
Seek Experts (That’s where we come in!)
The most valuable resource that you can tap into is us, here at Bore Tide One Source. We are armed with the latest information and will help guide you when you run into inflation and supply chain issues, to find a solution that best fits your needs.
As the exclusive Alaskan Distributor of IPromoteU (one of the world’s most prominent buying groups), we bring access to vendors and negotiating power that is unmatched in Alaska. We know how to fill your needs and are here to help!
Riding the Wave
Just as our name implies, we pride ourselves on our ability to navigate these incoming tides and change the direction of the current. We push against turbulent waters to create waves that take our clients to where they want to be–a phenomenon all too rare, but one we thrive on.
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