By Diane M. Calabrese / Published March 2023
Predictable is the one answer we did not get, but there’s hope.
Time consuming is the way Curtis Braber, owner of BE Power Equipment in Abbottsford, BC, Canada, sums up the current state of the supply chain. He does see improvement coming.
“Coming out of the pandemic-induced supply chain challenges, we are starting to see many supply lines stabilize again, but there are still a few challenging components that continue to throw curveballs into daily production planning,” says Braber. Time is a big factor.
“Our purchasing teams spend a lot more time managing and tracking components that prior to the pandemic they would not have had to think twice about,” explains Braber. Structural changes have occurred, too.
Braber’s company recently acquired GCA Largo. “This decision was based largely on supply chain factors; having the flexibility for offshore [parts production] and [the ability to] produce more high-quality components in the U.S. is vital for success in the future,” he says.
“A consistent supply chain is absolutely a top concern,” says Braber. “In fact, it is the most discussed and focused-on topic in our weekly strategy meetings.”
No business plan or business can succeed without a recurring infusion of optimism. And despite concerns about the supply chain, there is optimism both about the bright spots that appear and successful strategies for working through the issues.
“With the price of oil somewhat stabilizing and the pandemic demand boom fading, the container shipping cost has dropped significantly compared to a year ago, which is good news,” says Yujin Yoo Anderson, general manager at Steamericas in Gardena, CA. Good news indeed, especially when coupled with the proactive approach taken by her business.
“In 2021 and 2022 our company in-vested heavily on logistics and supply chain readiness by using historical inventory movement data and sales pipeline per item for forecasting with the help of AI and outside consultants, and I believe it has paid off,” says Anderson. It helped to mend links and improve flow.
“While we couldn’t avoid backorders completely, we have been able to fulfill orders on the spot or within weeks, the longest backorder being less than three months, while reducing the inventory asset,” explains Anderson. Turnaround—the most expeditious possible—is what customers want.
“At the end of the day, no stock means no revenue generated today even if your customer is sold on your product,” says Anderson. Conse-quently, information must also flow.
“In my humble opinion, interdepartmental communication between sales and operations is paramount,” says Anderson. “Historical inventory movement data is black and white, but it rests on the salesforce to accurately predict the probability of each sales opportunity, which directly affects forecasting based on S&OP [sales and operations planning].”
“I won’t use the words I want to, but to say the supply chain is disrupted is an understatement,” says Jim O’Connell, president of Pacific Bay Equipment Service and Sales in Modesto, CA. “We have items that have been on order for eight months with still no anticipated delivery dates. Our suppliers and manufacturers are continually struggling to get us material and equipment.”
To compensate for the slow deliveries, O’Connell uses several techniques. “We are maintaining higher levels of inventory on hard-to-get items as well as using multiple vendors for hard-to-get products,” he explains. “We also substitute with other like products.”
The can-do approaches extend to providing equipment service, which also suffers with delays in delivery. “Our tech and sales teams have to get creative to provide our customers with the products to either complete a repair or provide a machine,” says O’Connell. “We have also started keeping more used equipment to rebuild.”
If supply chain disruptions were not enough to complicate business planning, there are new regulations to build into the way of doing things. For example O’Connell says the California “small engine ban in the works is compounding supply as well.”
A business owner juggles multiple concerns at any given time. But supply chain has become by far the biggest concern.
“Right now more than ever, supply chain issues are our number one concern,” says O’Connell. “Obviously without product we have nothing to sell, whether it is to repair or to replace equipment.”
The frustration of businesses is being matched by that of customers. That’s not a good thing.
“Supply trumps everything in our world,” says O’Connell. “Customers are getting sick and tired of hearing it is on back order until who knows how long.”
O’Connell says not only have businesses had to lower their expectations, but also they have had to master how they manage customers’ expectations. And the management must be done always in the context of providing high quality service to the customer from the team.
“I believe we are going to have struggles with the delivery of products through 2023 as well, and I see some items we may have to discontinue and substitute with a different product or product line,” says O’Connell. “We are not through the challenges yet.”
O’Connell says an abundance of some products may drive prices on them downward in 2023. Now, however, the question is whether the price increases on items in limited supply are “sustainable”—and he points to as many as three increases from some vendors during 2022.
“The other huge issue we see is the cost of moving items through the freight channels,” says O’Connell. “There seems to be a move to continue to raise prices but lower the bar on services. As a small business we continue a balancing act between providing goods and services that are needed versus what is actually available.”
Fouled-up-beyond-all-recognition (fubar) is the descriptor that Roy Pennington uses to describe the supply chain. Pennington owns Hi Pressure Cleaning Systems Inc. in Houma, LA.
“However, it is time for people to quit blaming ‘supply chain issues’ as a crutch for all their inadequacies and lack of desire to get it done,” says Pennington. “It has become a ‘catch-all-ain’t my fault’ for any and all failures to deliver and make good on normal business expectations.”
Pennington shares an example of a vendor that took almost two months to deliver a pump. He got things moving only when he contacted the vendor and then took action.
“When we inquired about the pump, the response was, ‘We have the pump, but no label for it, and we are out of the mounting nuts. That’s why your pump didn’t ship,’” says Pennington. “I assured the vendor we have plenty of nuts here and an engraver, and we will engrave the pump number into it before shipping it overseas to the drilling rig that has been awaiting the pump.”
Pennington says there are “two strategies” for dealing with shortages: order extra or order just what’s
needed. The latter falls into what he says is the “if everyone would just order what they need and not hog stuff, everything would be okay” strategy. It’s one with which he does not agree.
What’s wrong with the let’s-all-share approach? “People who profess to this business strategy also believe, ‘It’s just a friendly poker game,’” says Pennington.
“Let’s share what there is” might work in some settings, such as divvying up a sheet cake at a birthday party, but not in a business setting.
“My theory is simple; if I don’t have it, I can’t sell it,” says Pennington. “If I can’t sell it and get paid and make a profit, I have to go to bed hungry without supper. I don’t like being hungry.”
Pennington firmly believes that to deal with supply chain issues, one must stay ahead with supplies as much as possible. “Recently I placed a regular pump order for inventory,” he explains. “My vendor said, ‘August is coming—Italy kind of shuts down, and with supply issues there is going to be a pump shortage.’” So Pennington ordered more pumps than needed. Similarly, he ordered extra hoses when he learned about extended delivery times.
To those who are “nay-sayers” to his approach, Pennington offers a blunt explanation of it: “There are no awards for participation in business.”
A business must make a profit. That’s the point of it.
Pennington is extremely concerned that the supply chain issues that erupted in 2020 are now being used as a substitute for a can-do business philosophy. “Busi-ness is really simple,” says Pennington. “Tell your potential customers what you can do, and when they need it, do it.”
Pennington’s be-tough-this-is-business outlook is not only refreshing, but it is also key to the resilience and spirit that must be rekindled. The sooner, the better.
Dennis Black, the president of McHenry Pressure Cleaning Systems Inc. in Frederick, MD, offers a caution our industry (and others) ought to heed and address.
“I am very concerned how the last two years have changed the tone and attitude of business and customer ser-
vice levels—not for the better in my opinion,” says Black. “I fear that this change in culture, attitude, and just ways of doing business will have more lasting effects than the actual shortages.”
Black’s implied advice: Don’t let it happen.