When the COVID-19 pandemic turned our society upside down in March 2020, supply chain challenges started with toilet paper – two years later, it’s continuing to impact the direct mail industry in full force. Paper shortages … rising costs … labor shortages … delivery delays … we are scrambling for solutions. The Nonprofit Alliance convened a town hall of industry experts who took a deep dive into what’s happening and provided guidance on how to navigate through these challenges.
There are essentially three areas causing the paper and labor shortages, delays, and cost increase:
- Industry Labor Shortage – Printers and manufacturers are seeing a level of employee turnover they’ve never seen before. There was a workforce withdrawal at the beginning of the pandemic when many workers were furloughed, laid off, or left to provide childcare at home. There are open job opportunities everywhere and companies are having trouble retaining employees because they can easily find another job if they don’t like their current employer. There’s also not much education focused on this industry anymore, so companies need to market the industry better and work to provide on-site instruction to funnel more skilled workers into the industry.
- Raw Materials Shortage – There’s simply less paper being produced today, and it’s a global issue. When the pandemic started, the commercial side of the direct mail industry stopped mailing, but nonprofits continued to put things in the mail. Paper mills stopped making paper and let their material pool dwindle since there wasn’t as much demand. Instead, many mills switched to producing packaging because there was a larger demand from people purchasing more online. When commercial mailing came back strong, mills suddenly didn’t have enough materials to keep up with the demand – and this domino effect still impacts us today.
- Transportation – Gas prices continue to increase, making transporting materials much more expensive and challenging. Because there is a shortage of materials, trucks are no longer taking appointments for pick up unless they are sure the products will be ready for pick up. There is also a massive truck driver shortage – there’s only one truck for every seven available loads.
- Postage & Delivery –There are more proposed postage increases coming around the corner – USPS is proposing an increase of 6.4%. Additionally, the marketing flat mail rate is proposed to increase by 2% every six months – this could mean a 22.2% increase over an 18-month period. While USPS delivery is trending fairly steady and reasonable right now, it’s important to know that due to the truck driver shortage and fuel cost increases, drop-shippers are only picking up twice a week rather than three times a week – causing some minor delays if drop shipping is being utilized.
So … how long is all of this going to last? It’s hard to tell, but a recent McKenzie report predicts it will go well into 2023, and the paper shortage could last even longer. With this turning into our new standard for longer than we would like, here are some tips on how to help mitigate these challenges:
- Be forward-thinking. The earlier you can begin strategy and creative conversations for a campaign, the better. As a starting point, assume a three-month lead-time at a minimum for a multi-component mailing. And pre-purchase materials, especially envelopes, as these are the biggest challenge to procure with order lead times currently averaging 12 weeks.
- Work with your production partners on an annual program plan, not a campaign-by-campaign basis to help anticipate challenges and find ways to reduce cost.
- Loop in your production partners at the beginning of your strategy and creative brainstorming. This will allow your partners the opportunity to provide input on materials or suggest other ways to get what you want that require fewer hands.
- Tighten up approval processes. By reducing the number of people who need to review or touch your copy/creative or the number of rounds of edits, the faster you can get the package to production.
- Do NOT skip any quality control steps. With fewer employees, those working on your project are more likely to be stressed and fatigued making it more likely for things to slip.
- Have Patience. Projects are going to take longer than expected. Be flexible and understanding as we all navigate these challenging times.