The Coronavirus spread in 2020 prompted shutdowns of industries worldwide. While many of us were in lockdown, consumer demand continued to strain global supply chain. As vaccines became more widely available and lockdown restrictions were lessened, the impact on the supply chain became apparent.
Demand has skyrocketed and supply chains that were disrupted during the pandemic are struggling to bounce back. This has led to logistic issues and procurement challenges for both manufacturers and distributors of goods who cannot obtain a steady material supply as much as they did pre-pandemic. There are several key factors, including: raw material disruption and shortages, labor shortages, transportation and logistics challenges, and inflationary pressures that can destabilize global supply chains.
America seems to be running out of everything. Supply-chain bottlenecks caused a record shortage of products from household goods to raw materials. Different parts of the world have experienced supply chain issues which have been exacerbated for different reasons. For example, the Minnesota Trucking Association estimates that the country has a shortage of about 60,000 drivers, due to issues such as recruitment, early retirement, and Covid-cancelled driving classes. These types of labor shortages can be seen at every part of the supply chain, not limited to truck drivers, and are having a severe impact on all companies. These shortages are a hallmark of the recovering pandemic economy. Companies are having a hard time attracting workers they need to meet the demand from consumers. Wage inflation is at an all-time high and expected to continue as employers attempt to attract and retain new employees.
Demand is Soaring
Home builders have been scrambling to find employees and experienced a shortage of raw materials, putting the industry under pressure. Supply chain challenges in the U.S. building products and materials sector are taking longer than expected to normalize, causing production delays. Our Supply Chain Director, Jeff Wisniewski, had this to say:
“Getting raw materials is difficult. Several vinyl extruders have lost significant percentages of their work forces and are struggling to recover. These suppliers are vital in supplying and manufacturing our materials, such as window profiles. Everyone in the industry is connected. Supply chain challenges impact manufacturers. Without materials, windows cannot be made. This in turn impacts distributors, retailers, contractors and consumers. Likewise, suppliers who buy materials overseas significantly increase lead times over suppliers who buy domestically solely due to the port closures and delays. We have been dealing with these problems by negotiating with suppliers to alleviate backup of materials. We are playing catch up due to factors that are out of our control. Overall, we have been able to keep up with demand relatively well amid the congestion and should be expected to maintain high industry standards based on a global caliber dependent on port statuses.”
The demand for raw materials has grown so rapidly in the past year that it is the equivalent to about 50 million new Americans joining the global economy. Demand for our product has increased significantly while getting raw material has become increasingly more difficult. Viwinco General Manager, Michael Duncan, said:
“It has been a real mess. A tremendous amount of our people’s time here has been spent chasing ETAs from suppliers and expediting material. The team has done a pretty good job allowing us to stay in material. There cannot be many more difficult jobs out there than working in purchasing during the pandemic. We have had to balloon our inventory, against our goals, to help hedge. One of the biggest ways that companies can combat this right now is consistent and strong communication throughout. The more notice received on potential issues, the easier it is to plan and communicate downstream. However, the nature of these issues and the ripple effect that this has through supply chains inherently makes consistent and accurate communication very difficult.”
Is LEAN to Blame for Supply Chain Challenges?
There are some that blame LEAN—more specifically, Just-In-Time (JIT) inventory management techniques—for the supply chain issues we are experiencing. In contrast to the traditional inventory system of stockpiling excess material and trying to forecast upcoming orders, JIT emphasizes only ordering material that is needed to produce current orders. While some believe that this focuses on minimizing inventory, it actually focuses on optimizing inventory. When correctly implemented, these strategies can have significantly beneficial impacts on both the company and their customers.
As high demand for supplies remains consistent, the global supply chain will continue to break apart. Viwinco will navigate these trying times by continuing to manage demand by negotiating with our suppliers to alleviate the backup of materials. We are also in the process of building an additional glass facility that will allow us to better control the source. In addition, we are automating a system to assign accurate ship-to dates for new orders which will greatly increase customer awareness of accurate order arrival times. Finally, the industry forecast for 2022 remains uncertain but Viwinco expects to maintain high standards for obtaining materials, manufacturing products, and delivering windows and doors to our customers.