How was 2022 for Cottonsoft? What were the highlights? What were the challenges?
Cottonsoft had a very strong growth year in 2022.
We were well placed to start the year, following the opening of another Auckland factory in late 2021, and the market exit of some retail competitors. With continued supply constraints across the away from home market, our supply infrastructure and service abilities allowed us to provide solutions to many of our established partners and still support new customers.
A 2022 highlight was our supply chain resilience. We were able to overcome the limited availability of containers with bulk tissue supply and switch our container allocations over to Commercial products. Later in the year, when other competitors suffered supply disruptions, we were able to source extra volumes using our connections to multiple mills and our strong contracts across the world.
Key challenges we responded to were the ongoing supply-chain disruptions and “sticky” high freight prices impacting the costs of goods. Even with the increasing market prices, we haven’t been able to fully recover the rise in costs, leading to significant margin erosion.
What are Cottonsoft’s main priorities for 2023?
A key focus is stabilising operations and working in partnership with our customers to support their future plans.
We still hold significant buffer stocks across the business – at a huge holding cost – in order to meet our commitments to our customers.
In addition, we continue to face severe labour shortages impacting everything from receiving, devanning and returning containers, transport supply, and our ability to increase output on locally manufactured products.
While 2023 will still see the impact of labour shortages, inflationary pressures and the remnants of covid disruption, we’re looking forward to these easing and are preparing for new product releases that have been on hold for some time.
What do you see as the main challenges the market is facing in 2023?
Impending recession is on everyone’s mind so spending may slow. However, with existing labour shortages there may be less impact on employment than we might have seen in other recessions.
Employees who lose jobs may be able to fill current vacancies, so unemployment may not lift as high as predicted even with the tightening of monetary policy.
Recessionary times put pressure on margins, and businesses who provide alternative solutions and products to restrain cost increases will be able to direct their customers to those solutions. An example is our Livi range, which provides Good/Better/Best options for the end user looking to economise, the three ranges also allow us to cater for individual business needs.
There is significant future imposition of regulatory change being rushed through by the government, with changes to everything from water supply, RMA, Product and Waste Stewardship programmes, and employment changes. The last few years have taught us that rushed policy has unintended consequences. Be aware of these changes, raise your thoughts around the impacts, and have your say.
What do you expect to be the big trends of 2023?
Economising. Not necessarily cutting out all spend, just prioritising and being more careful about where money is spent.
What is Cottonsoft doing to create a more sustainable supply chain in 2023?
Sustainability is a key focus for us, and we have a large number of initiatives under way, including:
- Measuring and reducing our carbon footprint from cradle to grave
- Reviewing product specifications to increase the density of product on each pallet and container
- Increased automation to reduce forklift and people movement
- Reviewing energy and resource use
- Removing plastic from existing products, and making sure our new products are improvements on existing ones
- Manufacturing specialisation in our factories
- Increasingly, shipping directly from manufacture point, rather than moving to central warehousing locations.
- Encouraging full rather than partial shipments of products and shipping in bulk
- Ongoing use of backloading for stock movements including to customers
- Moving tissue supply to the most efficient mills, while protecting security of supply.
Are there any key sustainability commitments Cottonsoft has made for 2023?
Yes. We follow and support the commitment of our global supply partners. APP are signatories to COP22, and their commitments are linked to the UNDG and measured annually in their sustainability report.
Their Sustainability Roadmap Vision 2030 includes these commitments:
- 30 per cent reduction in carbon intensity
- 50 per cent increased use of renewable fuel
- 25 per cent reduction in energy intensity
- 30 per cent reduction in water intensity
- 30 per cent COD emissions lower than local regulations
- Zero waste to landfill
- Minimum recycled fibre composition in appropriate products
- Increased product biodegradability and resource efficiency
Locally, we recently measured our own carbon footprint, and implementing our reduction strategy in key focus areas – electricity, transport, and waste.
What advice would you give to fellow leaders in the cleaning industry?
In 2023, we have the need to secure the basics of our businesses.
Continuity of product supply and service provision while also having a watchful eye on end user expectations, is critical.
We need to be ready to respond to raised performance expectations. Throughout the COVID period, service failures and supply issues were accepted by most. However, the further we move beyond COVID, the less acceptable these issues will be. Are you ready?
Recent supply issues emphasised that a total reliance on one supply partner exposes a business to higher risk, unless that partner has an alternate source of supply should the worst happen. What supply security does your partner have in place?
Is there a message that you would like to share with the industry?
I would like to thank the industry for working with Cottonsoft so closely over the past three years, you’ve helped us meet industry and customer needs in such demanding times. We are committed to supporting the industry recovery in a sustainable way throughout 2023.