Fireworks – Strategizing for Supply Chain Disruptions

Fireworks Stock image

Upon hearing that the fireworks show was cancelled again, the looks on the kids’ faces were that of despair and disappointment. “The supply chain really sucks, Grandpa,’ to which my reply was that it did. How could I explain this to my 7-year-old grandson? How did he know what a supply chain was?

Yet due to lingering supply chain disruptions, the skies of quite a few cities were dark for a third consecutive year ­­­– we were not the only ones.

China produces most of the fireworks used in the United States. According to Julie Heckman of the National Pyrotechnics Association, China provides around 70% of the professional-grade fireworks used in fireworks shows. For commercial products, such as sparklers and bottle rockets, that percentage goes up to 94%, according to Forbes.

In April and May of this year, China had imposed strict COVID-19 lockdowns in many cities, including Shanghai, causing severe delays in the global supply chain. Export goods are piling up at ports as shipping rates skyrocket and labor shortages continue. In addition, the Ukraine crisis has pushed up oil prices, making the already high shipping cost even higher. For example, in 2019, it cost about $9,800 a container; this year it has skyrocketed to about $36,000.

Needless to say, the lingering effects of the supply chain disruption felt by various industries will remain well into the foreseeable future.

The best one can do at this point is to mitigate the effects of the disruption on your business. I know of a couple of Wisconsin companies that have peered into the crystal ball and made changes in their business models to position themselves as leaders as the potential for a recession looms. – You can, too. Here’s what I’ve learned:

  1. Realize early that change is necessary.
  2. Create a focused strategy for new export markets (remember if they are not able to get it from China, then perhaps they should buy it from you).
  3. Create strategic partnerships with complementary (non-competing) companies in your market.
  4. Share resources where possible.
  5. Cultivate relationships especially with your freight forwarder or preferred trucking company.

It is critical to look at everything to see how it will affect your business. Tornadoes, typhoons, earthquakes, alien invasions, fiscal solvency of your partner and more. These factors will all affect your future if you are not prepared for them. Successful companies are prepared; they anticipate threats and plan for all eventualities. My 30+ years in supply chain management have taught me to anticipate the impact of the weather, illness, labor unrest and public discord. It didn’t prepare me for a global pandemic, but the recovery skills are the same.