Supply Chain isn’t something we usually talk about:
In the last year, I’m sure you’ve heard about or experienced supply chain issues firsthand. To dive in more specifically, items have been increasingly difficult to acquire, prices have been going up, and lead times are often 8-12 weeks. We’ve said countless times to our teams that we are facing the perfect storm, but what does that really mean, and more importantly, what is HOLT doing about it.
If business was a game of chess, then inventory would be the King. The Kings are the most sought after and the most protected. They are nearly invisible on the board until they are threatened. Even with the best strategy at hand, without the King, we can’t win the game. For HOLT, if our amazing team cannot get you the products you need when you need them, someone else calls checkmate. Supply is tough right now. We don’t see major relief in sight. Here is why, and here’s what HOLT is doing about it to ensure we protect the King.
Manufacturers are struggling to produce products at the pace they did. COVID played a role in this. Envision a 2 x 4 light fixture coming down the assembly line. Two assembly line workers (within 6 feet) pulled it off, flipped it, and sent it on its merry way. Things had to change due to the pandemic.
What is in most of what we sell? Copper, aluminum, steel, and plastic. These are raw materials that have seen shortages worldwide. They go into the products we sell you. Oh, and did you know copper is at a 9-year high? PVC is at its highest point since Woodrow Wilson was president. Many of our vendors have gone to allocation models for 2021. That means if HOLT purchased 500 widgets from a vendor in 2020, they would only guarantee an allocation of 500 this year, or maybe 550. This whole scenario has given vendors no choice but to raise prices finally. Most vendors tried to hold but now cannot. When raw material costs climb, freight prices rise, and demand exceeds supply – prices go up.
Freight. Where do I begin? Freight is a mess. I worked in 3PL supply chain for seven years. I still have contacts in the industry and keep my pulse on it. We think our world is tough until we look at that industry. Bringing freight into the US is significantly delayed. I’ve heard stories of lost containers at sea. Getting a freight container is a challenge. Ports are jammed. The e-commerce surge has overloaded trucks. And to boot, logistic companies had to run limited crews during the pandemic too. You get the idea.
So, what is HOLT doing to make sure you are covered?
- Buying material like it is going out of style. We run a 42 day supply (6 weeks) pre-COVID and are running at 60+ days now plus additional lead times.
- Working more closely with vendor partners. HOLT works with them daily to understand their availability, lead times, and commitments. Our vendors are addressing concerns on their end as well.
- Added procurement and pricing personnel to keep up. We are spending a lot more time expediting PO’s, finding alternative solutions, and communicating issues to our teams and customers. Thinking outside the box is imperative.
- Our fill rates, even during the most challenging of circumstances in 2020, were 98.6%. We continue to strive for this excellence.
We have found that the more you plan and the more we communicate, the better off we will be. Frustrations and difficulties during this time have been universal, but we know we’ll get through it. HOLT was built on service and support, and that won’t change now. Our team continues to find ways to overcome these obstacles. We’ve been so fortunate to serve this community since 1960 – we won’t let you down. We value and appreciate your business. Thank you so much for your support and trust. It means more than you know.
-Ryan Holtzman, CEO
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