Industrial Distribution Two Years into the Covidian Era

It has already been two years since we started with the Commie Crud (tm Sgt. Mom) and what a two years it has been. I have occasionally put out a dispatch from the front lines of industrial distribution here in the USA and thought it might be a good time to give an update.

Inventories are up in all sectors of my business and every distributor is hoarding as much stuff as their banks will allow. Production patterns are impossible to predict as there always seems to be another calamity in line whether it is Delta, Omicron, another freeze coming to Texas, and so on. It is relentless, never ending and exhausting. Every single day we go to work there is a problem of some sort. The good news is that it isn’t even a surprise anymore it is just part of the daily grind.

Where in the past we had smooth curves that were developed over decades of normal pattern buying, now it is all spikes all over the place. It is literally impossible to forecast correctly. So you load up the barn and sort of hope. Honestly, that is true, sad as it seems.

In the beginning of the Covidian Era, finished goods were the huge problem and still are. I thought it would be parts. Parts have held out pretty nicely until the last few months and we are now seeing issues across many vendors. It’s all about huge demand and problems with the workforce along with lingering transportation issues. Anything made “over there” like ductless mini splits are hopeless at this point. They just “show up” and we sell out and hope to see more. The companies can’t even tell us when things will arrive on a timely basis.

There really doesn’t seem to be too much light at the end of the tunnel, and there was at least a little six months ago. All industry people that I talk to are saying at least another year of this and maybe more. Prices are skyrocketing on pretty much everything but again, we are used to that now.

The good news is that we are flexible and able to find new vendors and solutions. If we were a large lumbering company with no room for change, it would be different but we are well financed, have a great bank relationship and are making new friends all the time.

So it’s tough again, but we are sort of steeled now. I know this isn’t much of an update really, but there it is.

It burns me crisp when I hear about teachers going on strike or when I see a tribute to medical people as if they are the only ones working hard through this. Not that I have anything against medical people, but give the rest of us “essentials” some love once in a while. Next time you see or hear something like that, mentally thank your auto mechanics, grocery workers, truck drivers, utility workers, HVAC techs, factory workers, and everyone else who hasn’t missed a day of work through this whole shebang. We are all exhausted too and would like to think that we are helping society by keeping machines running, people moving and fed, and structures lit, warm and/or cool.

22 thoughts on “Industrial Distribution Two Years into the Covidian Era”

  1. One of the things that’s going to have to change now that we’ve blown up the whole “just-in-time” global supply architecture is the set of accounting rules that tax inventory. When they made that change back in the 1980s, it probably looked like a good idea, but it was one of the things that drove a lot of manufacturing offshore, and was only really enabled by the burgeoning of globalization. Now that we’re finding out what globalization really costs, well… Yeah, it’s due for a bit of a re-think.

  2. We even used JIT for distribution when you could order a truck of something and it would show up a week later with regularity. Those days are long gone.

  3. Here’s a question–have you got a sense how much of the issues you see are due to supply chain origin issues, like your suppliers can’t get the stuff you/they need, and how much are due to personnel issues, like they can’t find people to do their work, delivery, etc., and how much of that is due to various things like the inability to find/keep employees vs disruptions due to testing/isolation, etc.

  4. I would say it is 50/50. However the personnel issues ripple backwards through the supply chain so in the end, it’s people for the most part. I’ve been looking for a warehouse guy for several weeks now at one of my locations – the people who want to work just aren’t out there.

  5. Dan — sincerely, thank you and your staff and your suppliers for all the hard work you all do to keep the wheels on.

    Our societies are becoming strange places. Specialization is one of the roots of necessary high productivity, as in Adam Smith’s famous pin factory example. Specialization also means that everyone in the chain delivering real goods & services is essential. Unfortunately, it seems our rulers have forgotten that.

    Maybe we should not want our rulers to class us as essential? Classic example was England’s official treatment of health care workers: at one stage, the rulers were encouraging socially distanced citizens to lean out their windows and “Clap for the NHS heroes”; shortly afterwards, those rulers were firing those same “essential” health care workers who had doubts about the efficacy of the injectants.

    Parts — I too had expected those to run into short supply … and some have. Maybe the reason the supplies of parts have generally held up better than expected is that there are short term workarounds. Can’t get the right size of bolt? Drill a bigger hole and use the next size up.

  6. This is one of the ways through which you can discover how little the vaunted “elites” really understand about the things they purport to run.

    It’s also a symptom of a deeper problem in the economy, that of “the workers aren’t worth their hire”. We used to do business with a firm that had a plant out here in Oregon, which manufactured cabinet parts out of American-made plywood. The cabinet parts company had been purchased by a major plywood company, then expanded.

    The West Coast plant was losing them their asses on mis-makes, mistakes, and a ton of other stuff that stemmed from the fact that they could not find employees that were worth a damn. They were almost all a bunch of semi-literate incompetents who drove the managers at the plant damn near nuts, because they’d constantly fail drug tests, get things wrong and then hide them, be late for work, quit without notice, and on and on and on. The workforce for that sort of thing here in Oregon and Washington state is utter shiite–We also worked with a supplier of cabinet doors up in the Seattle area, and… Oh, dear God. I still have nightmares. They re-did one door order four times, and still couldn’t get it right. Quality of work was abysmal.

    Pride in work has been beaten out of the workforce, for a lot of reasons starting with the way the elites have been managing both commercial enterprise and government. They’ve been treating people as commodities on both ends of things for so long that the people have finally responded by reacting like commodities. It’s been trained into them, with a thoroughness that makes me want to suspect it was deliberate.

    So, it’s not only COVID you need to worry about, it’s the general lack of interest in even working. The government cheese is too good; people don’t care about the slight difference between low-end employment and the government’s handouts. There’s also a growing sense of entitlement, wherein people think they’re owed a living by someone, so they rape their employers with an audacity that my generation can only marvel at. Whole thing is nuts.

    As a data point–Couple of years ago, we were slow enough that we were taking work over in the Seattle area. We did one cabinet job where we installed an entire high-end infill house in the U District over a weekend. The general contractor we did the work with (hired separately by the cabinet supplier on that job…) commented to us that we were “…the only white guys I’d have back on any of my job sites…”. Which, as you can imagine, kinda left us a little nonplussed. His reasoning for only hiring first-generation Mexicans or Ukrainians was simple: The average “other” person he hired, white, black, hispanic, or whatever…? They were utterly useless; spent the day on their phones, didn’t do the work, concealed damage, stole materials, stole tools he provided… You name it, in terms of “construction worker sin”, they were doing it. So, he quit hiring anyone but the aforementioned first-generation immigrants.

    That general contractor? 3rd generation in the business, as white caucasian as you could possibly get. No sign of prejudice, either–He was just reacting to what he’d dealt with.

    So, yeah… The problems run a hell of a lot deeper than just offshoring and supply chain. You also have a bunch of workforce-related issues stemming from the growth of things like the drug culture and the legalization of pot. Try finding a forklift operator for your warehouse–You won’t be able to, without paying a fortune for them, ‘cos now that pot is legal in a lot of states, nobody can pass the drug tests for insurance. Legalization is nowhere near being done working through all the second-, third-, and fourth-order effects.

  7. @Gavin – it’s hard to say why it took this long for parts to start to show problems. Possibly they had so many piled up that it took a while to go through? No idea. It’s one thing to use a bigger bolt, but quite another when you need a gas valve for a rooftop unit or pcb for a chiller, etc. There are still a lot of aftermarket parts but they need chips too.

  8. OTOH. We have warehouse workers who want to do a good job, but management does not know how to run warehouse. The lower managers know what to do but even the simplest tasks must go to high levels. Management does nothing to help us in our jobs, but are quick to discipline. Anyone who has talent or wants to accomplish something, like having pride in a good days work, leaves so then they, sensibly, no longer invest in training. No training & no respect >> gets one low quality employees >> who are not worth treating well >> hey we’re in a loop here.

  9. To all of these companies that listened to their young MBAs extolling them to move their plants to China – I’d like to ask “How’s that working out?”

    Are there still unemployment benefits being given 2 years later?

    That was a mystery solved for me during my last 5500-mile road trip in Sep last year – could not understand why so many hotels had “no vacancy ” signs – and an owner gave me the industry secret – that the average occupancy rate is only 40% but they can’t find the help to clean the rooms

    In Klamath Falls OR I saw a Comfort Inn completely closed. In Bend OR saw ads from a Ford dealer and Subaru dealer both trying to fill positions for nearly …everything.

    I dubbed this trip the Coronavirus Challange and managed to come back with it.

    But it was so mild I thought it was a summer allergy. Just a persistent cough and respiratory system with phlegm.

    Commie Crud – I like that/ Will add it to my lexicon. Where do I send the royalty checks, Sgt Mom?

  10. @Dan,

    That is exactly what went wrong in much of British industry; the employees were caught in that vicious cycle you describe. That’s why the same people who were producing crap cars at British Leyland are now producing (or, were… Been awhile since I last looked at it.) decent-quality cars for Toyota and Mitsubishi.

    It’s a cultural disease that I think we developed separately from the Brits, in that there were massive class-based communication issues between the shop floor and mid-level management. That’s a huge part of the reason why Dyson moved their operations to Singapore; they were simply unable to get the mid-level British managers to get good work out of the employees they had. It was the exact same problem at British Leyland, which was why everyone thought “It’s the employees…”. Turns out, those employees do perfectly acceptable work under Japanese management, sooooo… Do the math.

    We’re growing some of that same problem here in the US, mostly because of our educated-yet-still-idiot management class that’s running everything. Although, I suspect it’d be more accurate to say that they’re “ruining everything” vs. “running”.

  11. Royalties? Pish, tosh, guys – just buy some of my books, or tell your friends about them.
    Me, I’m military retired, living the dream in Texas in a tiny house that’s within three years of being paid for entirely … and working at a job I love, which involves books, words, sitting behind a computer and being creative.
    And also trying to talk sense into other people who want to have their books published, but that’s another story.

  12. Writers…? Sense? Are those two concepts that ought be placed in a collective group?

    The more time I spend hanging around some writing groups, the more I am coming to agree with Heinlein on the issue–The need to write really ought to be classed within mental illness.

  13. “Writing is not necessarily something to be ashamed of, but do it in private and wash your hands afterwards.”

    I should have included the quote… There’s another one out there that I can’t quickly find on a search, and I’ll have to look for it.

    Ah, yes… Found it:

    “There is no way that writers can be tamed and rendered civilized or even cured. The only solution known to science is to provide the patient with an isolation room, where he can endure the acute stages in private and where food can be poked in to him with a stick.”

  14. Dan:

    I just finished a phone call with a customer service representative from a company from which I had ordered some frozen food-stuffs, and found that somewhere along the line someone (or a web site) had stolen my credit card number. After giving the details of the order so they could track down where the fraud occurred, we chatted for a few minutes.

    The particular product that I had ordered had not been on their web site all fall, and I had sent them an e-mail asking why. I got a response (to my surprise) saying that it would be available again in the second week of January. I kept hitting their site, and it showed up, and I ordered it.

    Talking with the rep, she told me that this particular product was extremely popular, and that when it was on the web site this fall it sold out in a matter of a few days. Apparently this company was having massive problems all along the line, from buying ingredients for the basic product, to purchasing the spices with which it is prepared, to having enough workers to actually make the product, to being able to package and get it out the door. All along their supply chains and vendors, nothing but problems, shortages, and personnel “issues”. I was apparently one of the lucky few who had managed to find the brief window in which the product was available. Today, it isn’t. They’ve actually rationed their corporate purchases of this product to about 1/10th of what they could actually sell, if they could stock it.

    This whole thing is attributable to the Uni-Party’s Dem-wing overreaction to the China-produced virus, which affected a tiny minority of the population. I personally have just gotten over the Moronic Variant of the Death Plague, with nothing more than a cough and runny nose (and missing my sense of smell and taste for 3 days) despite multiple co-morbidities and age (mid-60’s). The purpose was to overturn the 2020 election, which along with the massive fraud, it did, but it has now morphed into a semi-permanent power grab. The destruction of the economy and subsequent dependence on government largesse is simply a nice sequelae to the original intent.

  15. @David
    Yes, it was your excellent review that let me understand
    why my company is dumbing down its jobs –
    to the point where they’re painful for those that are skilled or talented.
    And Kirk’s comment about the disconnect between corporate management and
    the “shop floor” management closes the loop.

  16. Parts availability may be explained by the seeming lack of personnel to man the assembly line. If you cannot make complete assemblies, you can (may) be able to take the stock of parts ready to feed the assembly line(sitting gathering dust) and sell said parts to the installation/repair industry.
    Were I sitting on a large-buck stock of parts, I would be all over tending to my customer demands for any and all that I could supply. At least it may generate some revenue, and more valuable, likely, generate a tidbit of loyalty from those doing sales and installation. OTOH, I dunno.

  17. I am retired logistics guy from the Navy, have many years of forklift experience, but I wore my body out doing that over 20 years, so while I could do that work, mentally, physically I can’t.

    Not any more.

    I feel for the logistics guys these days, it must be a nightmare trying to work around all the personnel and regulatory nightmares of today.

  18. Try finding a forklift operator for your warehouse–You won’t be able to, without paying a fortune for them …

    So pay them a fortune and get the job done. You’ll have to pass on the higher expenses to your customers, but they have little choice: Either pay more and pass the costs to their customers, or do without. Etc down the entire line, but it works. Capitalism.

    Smaller companies don’t seem to have this (particular) problem, but larger ones tend to treat all their employees the same: low wages for fungible bodies. Drug-addled lazy thieves get the same pay and treatment as sober, hard-working and motivated workers. Don’t expect the latter to stay or stay that way, it gains them nothing. One bad apple …. and all that.

    OTOH there’s opportunity as companies spin off or sell unprofitable units, current employees or managers in touch with the floor can buy the units and turn them around.

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