Supply chain diversity helped adhesive materials manufacturing company Avery Dennison maintain resilience during the recent Finland port strikes, President and CEO Deon Stander said during an April 24 earnings call.
Ports in Finland ceased operations for nearly a month between March 11 and April 8 when the Transport Workers' Union AKT’s 40,000 workers went on strike. What was meant to be a two-week work stoppage turned into four weeks, with carriers such as Maersk warning customers to expect congestion once operations resumed.
The company cited supplier diversification and strategic safety stock as two tools it leveraged during the strike to minimize disruption. The tactics are ones Avery Dennison has learned through experience in recent years.
Stander reflected on lessons learned from when the company dealt with a 2022 strike in Finland in which 3,000 workers at a forestry group caused shutdowns at several paper plants. As a maker of labels and other paper-based materials, Avery Dennison was directly impacted.
Stander noted that “since the last experience we went through,” Avery Dennison has deepened and broadened its supply chain to make it more resilient to future disruptions.
“Our sources of raw materials are no longer just single regional sourced, but they are more multi-regional and multi-supplier source[d], and one of the reasons why we have seen no interruption during this period ourselves,” the CEO told analysts. “In fact, our service excellence actually improved across the world because we have this resilience that we put into our supply chain as well.”
Avery Dennison has also focused on stock levels. Stander said the company has increased its inventory management processes by analyzing where end-consumption will likely be from a process and data perspective and how it relates to inventory levels.
“I think that helps give us greater confidence in how we manage our own supply chain and what we do in that as well,” Stander said.
Supplier diversification is a strategy that has been an increasingly common playbook tactic over the last several years for navigating geopolitical risks. Fastener manufacturer Fastenal, for instance, also recently accredited supplier diversity as its its main defense against possible disruptions or challenges.
