All business is local - how supply bottlenecks arise and can be avoided

Natural disasters, geopolitical events and the pandemic are having a significant impact on business in the flooring trade. The reason for this is the fragile supply chain. It plays a central role in global trade for many flooring manufacturers in terms of the availability and cost efficiency of their products, but is vulnerable in many places. We shed light on the various factors that can jeopardize the supply chain in the flooring trade. Short delivery routes, the use of regionally available raw materials and the local production of floor coverings in Germany can be ways to minimize these risks. Floor manufacturers and sellers must minimize all risks that they can control. The levers for this are in their own hands. The last few years have clearly shown the risks to sales in the supply chain. Ultimately, the aim must be not only to maintain the greatest possible independence from factors that can hardly or not at all be influenced, but above all to be a reliable partner to the specialist flooring trade and all other customers.

Global risks and their impact on the supply chain

  1. Factory closures due to the pandemicThe COVID-19 pandemic has led to temporary factory closures, particularly in China, one of the main producers of primary raw materials and finished products for the flooring industry. This is all the more true for mostly PVC-containing design and vinyl flooring. These closures have led to delays in production and, as a result, to bottlenecks in the supply chain. In addition, the production of PVC flooring in China proven to have forcibly recruited Uyghurs This can also be prevented with an intact, transparent supply chain. 

  2. Blockades of important trade routes: The incident in the Suez Canal in which the Container ship "Ever Given" blocked the waterwayis just one example of unforeseeable events that can cause major disruptions in the global supply chain. Around ten percent of the world's freight flows through the Suez Canal, which is just one of several bottlenecks in global shipping traffic. The actual blockade only lasted six days. During this time, however, around 200 container ships were jammed and did not take the two-week longer route around the Cape of Good Hope. The result was a domino effect that had a massive impact on the manufacturing industry in Europe. Medicines, electrical appliances and even building materials for floor coverings were partly "out of stock". Such blockades not only lead to delays in the delivery of raw materials and finished products and corresponding supply bottlenecks. The consequences are also price increases and, in the construction industry, where trades are coordinated with each other, massive planning chaos with corresponding price increases and delays until completion.

  3. Geopolitical tensions and attacksThe attacks by Houthi rebels on cargo ships in the Red Sea show how geopolitical conflicts can affect the safety and reliability of sea freight. Such events can disrupt flooring supply chains by also jeopardizing transport routes. The same applies to the Strait of Malacca, which is only 2.7 kilometers wide and is a constant source of concern for China's foreign trade in particular. In order to secure these routes, the German Navy has now also deployed Army deployed its first frigate. But even so, insurance costs alone are driving up the prices of raw materials, materials and finished products - to the detriment of the flooring industry and its customers.

Advantages of short delivery routes and local production

The aforementioned risks underline the importance of short delivery routes, the use of regionally available primary and secondary raw materials and the local production of floor coverings in Germany. These strategies are the basis for the production of CERAMIN floor and wall coverings, as they offer several decisive advantages:

  1. Resilience to global disruptionsShort delivery routes and local production reduce dependence on international supply chains and make the system more resilient to global disruptions such as pandemic-related factory closures or geopolitical conflicts outside Europe. For the Classen Group, the greatest possible independence in order to avoid exposure to precisely these factors has always been one of the most important guidelines. That is why we also think in terms of closed cycles - for us, that is also sustainability.
  2. Faster reaction timeProximity to the production facilities enables faster adaptation to changes in demand and reduces delivery times. This not only improves customer satisfaction, but also enables us to react more quickly to market trends. At the same time, we have the quality of our products in our own hands from the first work step through to completion and finishing. 
  3. Sustainability and environmental protection: Short transportation routes reduce CO2 emissions and promote more environmentally friendly production. The use of regionally available raw materials also supports the local economy and minimizes the environmental impact of transporting raw materials and goods.
  4. Quality assurance and jobsProduction in Germany is subject to strict quality standards. This ensures product quality. It's as simple as that. In addition, local production promotes jobs in the region and thus strengthens the business location.

Conclusion

The supply chain in the flooring trade is exposed to numerous global risks that can have a massive impact on the availability and cost of floor coverings. Focusing on short delivery routes, the use of regional raw materials and production in Germany minimizes the potential risks for flooring retailers and their customers. These strategies not only increase resilience to global disruptions, but also contribute to more sustainable, environmentally friendly and economically advantageous production.

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