Supply Chain Woes & How ACECO Plans to OvercomeLeave a Comment
Beyond all the news segments and online articles, I knew the economy was bad when my beloved Cape Cod Kettle Cooked Chips, broke four dollars. Inflation! What a slap in the face, everywhere from the gas pump to the bread isle—prices keep getting higher. The Pandemic waned, but the shelves still aren’t as full as they used to be (I even saw baby formula in a locked cabinet yesterday) and that’s because the problem runs deep. How deep you may ask? I think it’s fair to say that it has grown to affect the global economy, and by it, I mean the supply chain. Though, before we dig deeper into how we got here, what ACECO is doing to keep pace, and maybe brainstorm some ideas to reach a global solution (why not dream big?). Let’s breathe clarity into the term Supply Chain.
A supply chain, no matter the industry, is a nexus of resources, individuals, organizations, and varying technologies, which are utilized in a cyclical manner, to form consumable products out of raw materials. This includes the delivery of source materials to the manufacturers and the navigation/cooperation of distribution channels that brings products to the retailers and eventual customers. More recently, the retail middleman has been cut out, thanks to the convenience of online shopping, yet we have come to realize that convenience came with some unwanted baggage.
Circa May 2020, in comes the pandemic. An unprecedented time that undoubtedly forced an economic slowdown across the globe. Corporations laid people off, just to make ends meet, causing production to slow or stop completely. Though people didn’t stop buying (durable goods such as office furniture, kitchen supplies, and outdoor activities), thanks to the financial boost of stimulus checks and the lockdown. A lot of these durable goods required lumber, steel, and other sturdy materials, from manufacturers who thought that the demand would be lower. But people’s urge for DIY projects and resort-like backyards pushed and pulled the need for such materials. And the docks, beyond backed up, had a lack of employees to process the goods and not enough truck drivers to deliver them—we all remember the ship traffic at LA’s port. This all resulted in an overwhelmed and understaffed supply chain, creating room for prices of everything to inflate. The price of steel, a material ACECO works with every day, rose a staggering 215% during the height of the pandemic, according to an article by Fortune.com. Around this time last year, the benchmark stock price for hot-rolled steel climbed to $1,825. Prior to the pandemic, it traded in the $500 to $800 range. Today, the price hangs around $849.
Now, citizens and companies are left wondering how to pick up the pieces–but let’s dial it back. To better our environment we must first better ourselves, and at ACECO we are doing everything in our power to make sure our customers don’t feel any pressure. To better understand how ACECO is dealing with the degraded supply chain, I had the pleasure to speak with our purchasing manager, Rebecca Hine.
Q: How long have you been the Purchasing Manager at ACECO?
A: I have been employed at ACECO for 7 years
Q: How would you describe ACECO’s supply chain model and why it works best for our company?
A: Our current system JobScope allows engineering to enter the BOM and allocates the parts that need to be ordered or issued from stock at our two (2) locations.
The system is effective in covering the production needs of material, parts, etc. The system captures the costs of the purchase orders and gathers the totals from accounting, who apply costs to the jobs.
Q: What struggles has ACECO encountered, and which of them ranks highest on our list to solve?
A: We have encountered longer lead times, more challenges with the locating the parts, challenges with the logistics and delays at the port for unloading overseas shipments.
Q: What precautions are we implementing to deal with the supply chain issues?
A: Working closely with engineering when needed to substitute parts to meet ship dates. Shopping around for electrical items due to suppliers not having inventory. Increasing inventory levels where needed to alleviate future delays.
Q: What is American Crane doing to be proactive regarding the strength of our supply chain?
A: Adding additional suppliers, increase inventory, work to maintain relationships with new and existing vendors. Work with engineering to substitute parts if required to meet customer delivery dates. Work with sales, engineering, and procurement during the design process.
One wouldn’t be wrong in saying that our affinity for convenience got the best of us. Sure, unprecedented times shook up the entire system, but the constant guarantee of next-day shipping along with the ease of online shopping put a strain on an already rusty supply chain. The comfort of receiving a product at your door after grazing a finger across a screen, made us forget that we live in a global economy— ACECO pride itself in saying ‘Build in the USA’ and we strive to source materials and parts locally and mostly from the USA—but that’s not a reality for most companies in the US. Regardless, the chain needs to be mended and that starts with transparency—b2b and from business to customer. We all have deadlines to meet and the more we’re able to flex, the less the system will be strained. Beyond that, companies need to look into shortening their cycle, somewhere along the line prices will change, but a locally sourced product that doesn’t require freight could drastically decrease your lead time. Finally, technology. As AI becomes more synonymous in our everyday lives, transparency and security will seem hard to avoid. And as AI weaves its way through every industry, smarter systems and software will be created that can manage our systems more efficiently than we can today. Daunting? Of course, but I’m willing to work with anyone and anything to lower the price of those kettle-cooked chips.