Financial

A Cure for Supply Chain Disruptions

By Mark E. Battersby / Published October 2021

Whether relying on deliveries and inventories of supplies, parts, and other goods or delivering goods, products, or raw materials into the supply chain, supply chain disruptions and skyrocketing costs are impacting every pressure washing business. That’s right, regardless of where they lie in the supply chain, disruptions are taking a heavy toll on all businesses, many with fewer resources to absorb or push back on price increases and less leverage to pass those higher costs to customers.

Consumer needs and spending patterns have changed, factory floor capacity remains diminished, and supply chain problems persist. A whopping 44 percent of small businesses recently reported temporary shortages or other supply-chain problems according to a survey of approximately 800 companies by Vintage Worldwide Inc., a coaching and advisory organization for small businesses.

If they haven’t already, every pressure cleaning business can expect regulatory changes, new taxes, and, of course, the continuing effects of COVID-19 to fuel supply chain risks and a higher cost of doing business. Whether the issue is parts, supplies, raw materials, or even equipment, how can any pressure washing business owner hope to cope with, or even profit from, rising prices and supply chain problems?

What is a supply chain?

Supply chains make up an essential aspect of most businesses today. In general, a supply chain is defined as the entire process of making and selling commercial goods, including every stage from the supply of materials and the manufacture of the goods through their distribution and sale. In other words, a supply chain is a network between a business and its suppliers to produce and distribute a specific product to the final buyer.

A pressure cleaning business develops supply chains so they can reduce their costs and remain competitive. An efficient, optimized supply chain is extremely important in the fulfillment of customer orders and in providing services. When managed correctly, it also results in lower costs and a faster production or sale cycle.

The Challenges

Today’s shortages stem from factors beyond lean inventories. The spread of COVID-19 sidelined port workers and truck drivers, impeding the unloading and distribution of goods made in factories in Asia and arriving by ship. These disruptions have taken all shapes and sizes. Storms in the winter of 2020 shut down oil refineries in the Gulf of Mexico, severely impacting not only the oil industry but chemical companies. And who could forget those shortages of items we hold dear, from Grape Nuts to toilet paper?

Commodities are not, however, the only factor driving prices higher. Logistics and labor costs have also increased, and a shortage of workers in some industries is pressuring business to raise wages. For many pressure cleaning businesses, the main supply chain challenges can best be summed up as follows:

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• Increased costs throughout the supply chain
• Supply chain complexity due to multiple channels to market
• Consumer demands driving the need for improved speed, quality, and service
• Risk in the supply chain creating pressure
• The impact of supply chain volatility
• Other demands on the supply chain

Management: Supply Chain vs. Business Logistics

The terms supply chain management and business logistics management—or simply, logistics—are often used interchangeably. Logistics, which is one link in the supply chain, is, however, different.

Logistics refers specifically to the part of the supply chain that deals with the planning and control of the movement and storage of goods, materials, and services from their points of origin to their final destination. Logistics management begins with the raw materials and ends with the delivery of the final product.

Successful logistics management ensures that there is no delay in delivery at any point in the chain and that materials, products, and services are delivered in good condition. This, in turn, helps keep costs down.

Supply chain management (SCM) is the umbrella term that covers product development, sourcing, production, procurement, logistics, and more. Without SCM, a pressure washing business owner or manager runs the risk of a reduced customer base and losing a competitive edge.

SCM isn’t just about creating an efficient process; it’s also crucial to mitigate risk and ensure everything runs smoothly. After all, there are many elements that make up the supply chain, from manufacturing sites and warehouses to transportation, inventory management, and order fulfillment.

Coping With A Volatile Supply Chain

Each step of this process carries countless risks along with many possibilities to derail an entire customer order. Minimizing delays, optimizing the time of day that goods are moved, the length of time that inventory is held for, and the order dispatch process are all points that can have a huge impact on a business—not only suppliers but also ultimately on the pressure cleaning contractor. Without an optimized SCM process in place, the chain can fall apart from the very beginning.

It is an unfortunate fact that many pressure cleaning businesses with supply chains are far from where they should be in order to deal with large disruptions such as climate disasters, trade wars, or another pandemic. Fortunately, no one has to reinvent the wheel in order to make a substantial upgrade.

A dynamic approach to the management of supply chains already exists and provides everything a pressure washing contractor or business owner needs in order to integrate lessons learned to create a more robust supply chain, one that applies agile processes towards disruptions in real time. This approach also resolves root causes to pave the way for long-term growth.

Flexibility vs. Resilience

When it comes to coping with disruptions and changes, flexibility and resilience are both critical for success with a volatile supply chain. A resilient supply chain can weather the storm if one of their suppliers has to shut down production. A flexible supply chain, on the other hand, can adapt to new market trends and conditions in the blink of an eye.

With the rate of change and disruption continuing, and in many cases increasing, more management is required. It is important to focus specifically on dealing with disruptions in addition to avoiding them (via flexibility). This will be a largely operational hurdle that involves establishing point people and protocols for particular sorts of events and changes—with the help of digital technology.

Thanks to today’s technology, improved information and processes that lower supply chain costs are possible. By automating where it counts—and keeping all necessary parts well managed—the following can result:

• Economies of scale
• Smarter use of limited storage space
• Accelerated movement of supplies, and
• An improved ordering system

Just in Time

While there is not a single best way to create a winning supply chain strategy, a popular option is “just-in-time” management. Just-in-time management cuts costs by redistributing some of those costs to intermediate producers, who wind up either holding extra stock or finding other ways to cope with demand-side fluctuations.

Unfortunately, the major problem of relying too heavily on just-in-time is glaringly evident in the industry credited with inventing it. Auto-makers have been crippled by a shortage of computer chips—vital car components produced mostly in Asia. Without enough chips on hand, automobile plants around the world have been forced to halt assembly lines.

Still, today’s shortages raise the question of whether pressure washing distributors and equipment dealers have been too aggressively reaping savings by slashing inventory. Despite their role in the supply chain, however, many key players say they don’t want to replace just-in-time entirely because the savings are too great.

A Problem Without An Answer

With price hikes already common, inflation expectations are rising, posing potential problems for every pressure cleaning business. If the operation’s customers think that higher prices are here to stay, they may change their behavior in ways that cause price pressures to persist.

The bottom line is there is no single best way to create a winning supply chain strategy. Many businesses attempt to cope by using the following strategies:

• Cut inventory costs. Whether inventoried supplies, spare parts, or raw materials, savings may result.
• Use inventory management software. Fewer resources will be needed to serve customers, while the software programs will provide more information throughout the process.
• Integrate business processes with technology. Technology will help supply chains differentiate within a market that demands increasing speed, and
• Manage inventory risk by remaining flexible.

Pandemic buying and supply shortages exposed flaws in many supply chains that will continue to be exploited in the months ahead. Although many pressure cleaning business owners and managers learned how to cope with on-the-fly solutions (duct tape and chewing gum?), most postponed long-term investments while grappling with more immediate issues.

Today, all pressure washing business owners and managers can utilize past lessons and move forward. For some, that will mean stockpiling more inventory and forging relationships with additional suppliers.

Unfortunately, for far too many contractors, distributors, equipment dealers, and other business owners and managers, a lesson has not been learned, and the pursuit of cost savings will once again trump other considerations.