Trend Tracker November/December 2020

July 28th, 2021 by Nathan Hobbs

Supply Chain Challenges: It’s Time to Pull Out the Stops on Creativity, Logistics and Communications

By Michael Collins

In the future, mentioning 2020 will likely draw groans for, “What a year.” If nothing else, it has given owners, managers and workers in our industry a chance to prove their resilience and creativity amid challenges—the latest of which come from supply chains.

Window manufacturers report difficulty in the timely sourcing of all kinds of components—including glass and aluminum profiles, whether sourced domestically or from abroad. At the same time, here at home, pandemic-related challenges and a lack of available labor have slowed manufacturing and distribution. Those issues have been exacerbated by the understandable decision by older, more at risk workers, to temporarily withdraw from the workforce and the $600 bonus unemployment payments. While those payments are aimed at families facing job losses, they have unquestionably had the side effect of enabling workers not to return to work.

When a company’s supply chain begins overseas, the length of that supply chain intensifies dislocations as they move along, much like cracking a whip. Closer to home, wildfires were ravaging the West Coast at press time. While human life is the primary concern in any natural disaster, the implications for our industry and many of our customers center on added lead times for wood.

There is no easy fix. If you have a backup hardware supplier waiting in the wings and your primary supplier is running slow, perhaps now is the time to give them a try? On larger orders, sending customers the proposed hardware overnight to avoid days of delay might be the right approach. If it is a profile supplier that is in question, perhaps they have suppliers with whom they have partnered in the past, to which some of your product needs could be shunted?

There have been a number of advances in supply chain management that take some of the sting out of situations like this. Manufacturers often have better visibility regarding when shipments will arrive from suppliers than they did in the past—including the ability to check ship dates online.

In This Together

If there is a silver lining to this supply chain challenge, it might be the fact that it is not only your suppliers that are having problems—it’s an industry-wide issue. Thus, if you’re fortunate and your suppliers are faring a little better than others, that’s great. You may have a chance to grab some business from competitors. If the problem is widespread, though, the likely solution is that lead times will float out a little further for everyone. Manufacturers shouldn’t see their businesses harmed if they have strong track records with customers, have offered great service and—perhaps
most importantly—have been proactive and transparent in communicating.

It is important to bear in mind that, if we were experiencing slack demand from customers (as was the case in the last recession) none of us would even be aware that suppliers were having difficulty. All signs point to several years of strong demand and rest assured that this supply chain issue will be sorted out by suppliers and their shipping and logistics partners sooner rather than later.

Michael Collins is an investment banker and a partner in Building Industry Advisors. He specializes in mergers and acquisitions in the door and window industry.
mcollins@buildingia.com

To view the laid-in version of this article in our digital edition, CLICK HERE.

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