For those not familiar, I own an HVAC distributor, and HVAC distribution is a subset of industrial distribution. Every few months or so during covid I have been putting up a post describing what is going on in my little slice of the world. Time for a new one.
In general, not much has really changed since my last update with one large exception. I will get to that in a minute here.
A few weeks ago I spoke with several people intimately involved with large companies in my industry and they all agree that we have probably another year of supply chain disruptions and problems. That wasn’t exactly music to my ears as the last year and a half has been an intense marathon trying to keep my buildings full of product that my dealers need. The reasons are everything that you have heard before here and on other media outlets – labor shortages, raw material issues and now, chip problems.
The chip problem could be a really big issue as those chips go into printed circuit boards that control furnaces – and we need furnaces now for Fall.
My one large exception mentioned above is that my inventory levels are absolutely enormous and we are setting new records daily. This is killing my turns and as a result cash, but this is the new model. We simply can’t predict when things will come in so we have to pile in sometimes a full years worth of a widget. We are absolutely bursting at the seams and it is extremely stressful trying to keep everyone happy. We don’t dare cancel any orders as we would go to the back of the line, so it is what it is.
Freight is a major issue right now. We get damage all the time and the LTL lines are all extremely slow and sloppy. Hardly a day goes by where we don’t have a freight problem.
Parts don’t really seem to be an issue. Sure, there are certain things that we have problems with, but in general the parts world is OK so there is that silver lining.
However, my dealers are pretty happy with all of the work we are doing. We are finding new business partners, trading product if possible, and/or doing anything else that it takes to get the product that we need. It is, as I mentioned, a never ending marathon but at least I am used to it now. I do hope for some normalcy in the next year so we can sell down some of this inventory and get back to normal buying patters and forecasts.