Planning Ahead For Supply Chain Backlogs

Supply chains have hit a roadblock over the past several months and our business has not been spared the frustration of delays. However, this doesn’t mean your projects need to slow down or be put on hold. With proper planning and some strategic moves, together we can get the parts you need delivered to keep that project running on time and on budget.

Supply chains have hit a roadblock over the past several months and our business has not been spared the frustration of delays. However, this doesn’t mean your projects need to slow down or be put on hold. With proper planning and some strategic moves, together we can get the parts you need delivered to keep that project running on time and on budget.

Delivery Delays

First, the reality. Previously, parts were delivered within a two to five-week time frame. Even last-minute orders could be rushed and arrive on time. That delivery schedule has been greatly extended with shipments now taking significantly longer depending on their requirements.  According to an article in Bloomberg, research in October showed the average lead time for materials used in the production process rose to 96 days, the highest seen since 1987.

We’re also seeing instances where materials that used to be in stock are no longer regularly available or manufacturers have discontinued certain sizes and shapes altogether. To further complicate our job and your project, some raw material quotes are now only good for one day, or materials that are quoted sell out within hours. These issues make sourcing and securing raw materials extremely difficult. We can debate the various reasons that supply chains have slowed to a crawl, because there are several reasons, but what matters is how you can plan for late shipments and still get your work done.

Communication Is Key

Because Northwest Machine Works has always prided itself on how well and often we communicate with our clients, we can easily slip into the role of your advisor, helping you navigate the nuances of placing an order to minimize waiting and ensure you get exactly what you need the first time. What helps us tremendously is having customers who understand standard lead times and normal prices are a thing of the past and that they need to alter how they order.

One solution is for you to order in advance, lining up deliveries across multiple months and creating schedules that secure the best pricing. In the old days, this was actually typical practice, but manufacturers got out of the habit. Well, it’s come back in vogue.

Another way to help you get what you need is to ask a lot of questions beyond just requesting a quote. Ask us what we can provide and what delivery schedule is realistic based on our knowledge of the material availability and the overall manufacturing process. Expect to wait longer than you’re used to. Flexibility is key. Have an alternate plan. If we have to change direction after the project has been booked, be open to discussing various options to keep the project moving forward such as accepting partial deliveries in the short term while lags in the supply chain catch up.

From our side, we will be communicating with all our customers more than ever to ensure we have an understanding of your needs and offer transparency in what we can do. This is where our advantage as a smaller business really shines as you’re always more than just an order number. Expect us to schedule regular follow-up meetings so we can share what we know about market trends and supply chain challenges, what we are able to do to keep your project on track, and what changes may be occurring with prices.

Blanket Ordering Is Back

We will try to secure materials immediately or provide alternative options to meet any short-term needs. If you know the number of items you’ll use over the next 12 months, place the order and schedule monthly releases. This will allow manufacturers to plan ahead and secure materials while still having a chance to deliver on pre-determined release dates. Manufacturers don’t like to make a year’s worth of product and put it on the shelf because it’s risky, but blanket purchasing is keeping so many of our customers afloat that we’re willing to absorb the risk. Our year is nearly booked with blanket orders.

The majority of the quotes we provide will include costs for raw materials quoted from the manufacturer with a “price-in-effect” statement. This allows the manufacturer of the material to change pricing if there is a significant market shift in the cost of raw goods. Thus they invoice us the cost on the day we receive shipment. Most of our quotations have similar notifications to keep everyone informed.  Keep in mind our industry, like so many others, is suffering from profit erosion. Just as soon as we place an order it seems the cost of materials rises 5 to 20%!

We’ve heard a lot over the past year about how we’re all in this together and Northwest Machine Works truly feels that way about our customers and their needs. We want your projects to be successful and we know by working closely together we can help you to overcome any obstacles and achieve your goals. Contact us to see how we can help.

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