Supply Chain Complications
Building materials retailers and suppliers take stock of supply chain disruptions, potential recovery
“The supply chain usually flies under the radar, underappreciated, unless something goes wrong, for instance, during a pandemic. And then it gets the attention it deserves, and becomes very interesting to a lot of people,” said Ken Clark, editor-in-chief of HBSDealer, at the top of the publication's new webinar, “Maintaining the Supply Chain: What Lies Ahead for the Industry in the Wake of the COVID-19 Disruption.”
The webinar featured a discussion with industry leaders, moderated by Clark, and included Steve Sallah, CEO of LBM Advantage; Warren Arthur, senior vice president of supply chain logistics for Cameron Ashley Building Products; and Greg Goodale, director of purchasing for Riverhead Building Supply. The panelists spoke to both the short-term effects, and long-ranging impacts, of COVID-19’s disruption of the supply chain.
Retail Sales and DIY
Clark kicked off the conversation by asking panelists about two diverging statistics; the minimal recovery of single family home starts in May after the major drop in April, and the significant rise of retail sales for home centers and pro dealers. The reason for increased retail sales, according to the panelists, is DIYers. “I think there will be more money directed toward our industry because there’s nowhere else to direct it,” said Sallah. “People think it’s a good chance to renovate and fix up the home.”
Read more: How to find new opportunities during a down cycle
Supply and transportation disruption
While there may be strong retail demand, supply chain disruptions continue, said Goodale. “It’s like whack-a-mole out there for myself and my buyers, something pops up every day – delays, productivity issues, or maxing out the capacity of their plants and being able to fill the trucks and deliver to our yards,” he said. “There’s no shortages of things and categories of things that are experiencing delays,” especially pressure-treated woods, a shortage which he feels is fairly widespread across the U.S.
HBSDealer’s own industry survey on the supply chain seemed to confirm Goodale's observations; recorded on May 15, the survey asked participants if their company was facing supply chain disruptions. Sixty-six percent of retailers said the disruptions were mild, while 28 percent said they were severe; 56 percent of manufacturers described disruptions as mild, while 27 percent described the situation as severe.
The pandemic also further stressed existing supply chain constraints, including a lack of drivers, said Arthur. “Even before COVID, getting drivers was a challenge,” he said. “We feel having our own fleet is a competitive advantage.” Still, stay at home orders, which required the closure of businesses and facilities, meant that drivers faced challenges of restaurants and rest areas being closed, said Arthur.
Cameron Ashley also adapted to customer desires by allowing customers to pickup material through a no-touch service at their own facilities.
Labor, unemployment and sales
Panelists also discussed the ramifications of the labor crisis that resulted from the pandemic, as many employees were afraid to return to work, even when it was legal to do so. “There was a general fear of the virus that impacted everybody out there, in terms of who is willing to come to work,” said Sallah.
More than the direct effects to individual businesses, Sallah was also concerned about the broader economic impacts of continued unemployment. “Unemployment concerns me the most, and the situation the banks will be in as we come out of this,” he said. He said he worried about the ramifications of banks not receiving payments on leveraged businesses.
The relative limitations of virtual trade shows were also discussed. While online shows do have the potential to reach larger audiences, and may be the best short-term option, said Arthur, the “relationship aspect” is missing without the in-person meeting. “This is a belly to belly business,” he said.
Read more: Embracing virtual sales during COVID-19
Long-term effects and virtual communication
Despite the limitations of virtual conferences, Arthur says that traditional sales routes, and in-person sales calls will likely have to change post-pandemic. “A sales call with a purpose is what’s going to be the motivating factor for a face-to-face meeting; if it’s just a stop-by [meeting] I think those days are going to be done,” he says.
Panelists agreed that tech would be a vital component of adapting to business during, and after, COVID-19. “Technology is the key,” said Goodale. “Work from home [capabilities] was clutch, invest in your website, the consumer is resilient―if you’re not selling to them now, find a way to tap into that market.” Goodale also underscored the need to have central phone sales. “You have to be able to pick up your phone to take the order or answer questions.”
Read more: How to up your digital game to win in an era of physical distancing
Arthur says Cameron Ashley is also investing in tech to streamline processes. “E-commerce, creating better websites [is important], and we’ve implemented a [transportation management system] for transportation,” he says. “We’re trying to make sure we get the best, most efficient route.”
Sallah cautioned against businesses completely changing their business model, but suggested investing in online solutions as part of overall preparedness. “We don’t want to overreact to this happening every four or five years [since the last pandemic was in 1918]― people should make more investments in their e-commerce, especially the smaller retailers―I would have equipment [like PPE] on hand in case of a crisis again ... beyond that I don’t think there’s anything that’s going to change too fundamentally, unless things drag on for a year or two, I think things will bounce back to the old normal.”