It takes four weeks for a ship to sail from China to the UK. When you source supplies from China the convention is you pay for them before they sail. This means the time between paying a supplier in China and a customer in the UK paying your invoice could be at least two months and as much as four months or more. If you pick up a big contract, one that means placing big repeat orders with a Chinese supplier, this can really hamper your cash flow.
This was the dilemma facing Gary Thomas, founder of Switch Packaging Specialists.
Switch Packaging Specialists designs and supplies environmentally friendly pulp protective packaging products made from completely recycled pulp paper. Gary used to sell protective packaging when he had an idea for a greener alternative to the ubiquitous white polystyrene with which we’re all familiar. Gary explains how it came about:
“I was working for a packaging company and all the time I kept thinking about how I could replace polystyrene as a packing medium with recycled pulp. It became a bit of an obsession, so I designed a pulp corner to cushion impact. Not only did it work better than the alternative, it used less raw material, a better solution all round.
“So I gave up my career, sold my house, and we’ve been going ever since. While pulp protective packaging remains our primary product, we’ve since added design and consultancy services that help engineer cost out of the supply chain.”
Meanwhile, Switch Packaging Specialists has gone from strength to strength and is picking up some big contracts. Gary tells us about a recent success, “We picked up a big contract in Manchester. The managing director wanted to take all foam and polystyrene out of the business and he would need 250,000 protective corners every six weeks. That’s a big order for us.”
But there’s a downside, as Gary explains, “There’s nobody in the UK making what we need, so we have to get it from China. But 250,000 corners every few weeks would completely tie up our cash as we have to pay our supplier up front.”