The supply-chain issues continue.
Posted by Joshua Robinson on 2022-06-29
A little over a year ago, I had a post about some of the supply-chain problems and how they were affecting products made in the US. Unfortunately, many of those same problems persist - over a year later! You can read the original post here.
Some of the issues we saw last-year that we are still seeing today:
- Higher volume of orders
- Suppliers without inventory
- Orders not completely fulfilled
- Increased lead times
- Increased shipping delays
- Increased prices
We are also seeing some new problems:
- Customer delays
- More freight is being put on trains
- The war in the Ukraine affecting supplies
- The war in the Ukraine affecting prices
- Quality of supplies are less than ideal
We are still surprised at the increase in order volume. We expected some increase after the pandemic as a lot of people were "catching-up" from projects they put on hold during the pandemic - but the momentum has lasted a lot longer than anticipated, and in many areas, has actually increased! This means the orders we placed months ago (or in some cases late last year) are not enough to cover the volume of orders! When we couple that with suppliers that are shipping us less than the quantity we order - we end up with a HUGE mismatch!
Delays are happening from both ends.
As we try to build and ship projects, we are more and more frequently running into the issue that our customers are not ready for the project to be shipped! Delays on their end (with their contractors, city/county zoning, building materials, etc) have led to delays on buildings getting completed enough for the kennels to ship. This is not a big problem on it's own - we can hold projects until they are ready to ship. However, we quickly depleted our storage-space and now must either store projects off-site or in other areas. This extra handling costs us time as we have to travel to the off-site location and we have to move the project multiple times. To try to reduce the amount of projects we are holding on to, we are checking with customers to see if they are indeed ready for the project before we start building anything. This is causing us to re-arrange the production schedule - which takes time too. Additionally, a project that we might not have been ready to start for a week might all of a sudden be launched to the top of the list - and materials that are due to arrive later in the week (that would have been on-time for the original production-schedule) are now short. This sometimes causes us to re-arrange yet again - or partially complete a project and finish once the remaining supplies have finally arrived. Neither of these instances are ideal - but we are trying to do everything we can to get projects out as fast as possible.
More freight is being put on trains.
Trains can be a very efficient method of moving large quantities of materials. However, it does take a few extra days to move the freight since the shipment must now be picked up at a rail station, transported to a freight hub, and then put on a truck for the final delivery. We noticed that 80% of our finished projects headed to the eastern US are being put on a train (whether we want them to or not). We are told this is due to lack of truck drivers, a lack of trailers, and a rationing of diesel fuel. This extra handling not only affects our outbound shipments - but a good number of our suppliers are also on the eastern seaboard, so we are seeing delays with incoming supplies as well.
Materials are being used for war.
All of our materials are made here in the US - however, a lot of our suppliers are either owned or partially owned by companies in Europe. The war in Ukraine has caused some of the raw materials that would have gone to us here in the States to be diverted to Europe instead. We see that with our plastic especially. Europe had a tough time with oil-based products (such as plastics) before the war - and now that Russia has started reducing the supply of oil, some of our oil, fuel, and plastic resin is being shipped to Europe. This is also a big part of what is causing the price-increases. Europe is willing to buy these raw materials for more than the US companies, so the materials head over to Europe. This in turn causes more shortages here in the US, so companies here try to raise prices so they can purchase some of the materials - and the cycle continues.
Because of this, we are currently not offering custom-colors.
Our material is used for many other applications than just dog-kennels, so the colors we have "in-stock" are also used in other industries. Our suppliers are willing to keep making the material in the stock colors because they know it will be used by a good number of customers. A custom-color on the other hand will only be used by us. It diverts resources that are already limited to make a product that is only used by one company. Not only that, but our suppliers have to fully shut down their production, clean the machines, set up with a new color, and restart production every time a new color is desired. This takes such a long amount of time that they are not really excited about doing all that work when they are behind schedule as it is.
More materials are arriving in bad shape.
As our suppliers scramble to keep up with the demand, the materials are suffering. We are seeing more shipping damage. More production damage as they push their machines too fast - or they are skipping quality control measure that were in place prior to the pandemic. Most of the problems we are seeing are purely cosmetic; more scratches or slight color mismatches. Occasionally, we see some structural problems; material slightly thin, twisted, or warped. Sometimes we can correct these problems - other times we have to scrap the material. Either way, it slows us down when we have to sort through the material and try to fix these problems. To make matters worse, these defects are not found until the material arrives at our location. This means we've already waited the 20+ week lead-times just to get the material. The material is usually not the full amount we ordered (we are getting about 85%-90% of our orders) - and then we find that there is a lot more that we have to reject. This further reduces the amount of viable material that we can use to perform our process of turning those materials into kennels. We do have some great suppliers - and they do stand behind their product, so they do replace or repair the bad material... but it still takes time. We end up handling, shipping, and waiting yet again for the material to arrive.
Is it possible to expedite anything? Even for a fee?.
I get asked all the time if we can somehow expedite the process. Even if the customer pays a little extra. The answer is a resounding: "No". As you can see, the problems are completely out of our control. I cannot make the trains run faster. I cannot force my suppliers to ship me any more than they already are (trust me, I am on the phone with them nearly every day begging for more material). Our suppliers are running into the same exact problems we are. THEY cannot get materials from their suppliers. THEY are also fighting the same shipping hurdles.
Can anything be done to reduce the supply-chain problem?
Everyone is feeling the same pinch. It is hard to get materials. It is hard to ship. Material costs continue to rise. Believe me, if we had a way to build and ship the kennels twice as fast - we'd do it! That would mean twice the money for us... but it is not physically possible given all of these small issues that add up to big delays
That said, there are some things you can do to help out and increase the chances your project arrives on time:
As we get into the fall holiday season, lead-times will continue to stretch out. It happens to us every year - and I do not see why this year would be any different.
Don't make any last-minute changes.
We can make quite a few customizations to the kennels to make them fit your space or look the way you want - but if we have to make last-minute changes, it slows down the process.
Keep us in the loop if there are any delays on your end.
We know there are a lot of details to keep track of - and you have a lot happening at once. If you can help us by letting us know of any delays, we'd have more time to make adjustments and we might not have to store your project as long - or handle it as many times.