Not a day goes by when I do not read cataclysmic stories on how the supply chain is completely broken. From massive shipping delays to shortages of microchips, the supply chain up and down the line has been dramatically affected. I speak with members every day who tell me stories of unreliable shipping and long lead times on parts. There are simply parts that are just not available for the foreseeable future. I recently had a customer tell me that a radiator for a current model generator had a lead time of “unknown.” Not that it was not in production or obsolete or that it might take 12 weeks, but rather that they quite literally had no idea when it could be delivered. I had never heard a response like that from an OEM and I heard it twice in one week. Times are dire indeed.
Just in Time is Now Just in Case
I often used to argue with my father about why we carried so much inventory. I took a few business classes and learned that the most efficient way to manage inventory is with the “Just in Time” method, so I obviously thought I knew better than my old-school father. Essentially, this is the way that the automotive industry has worked. It is a well-coordinated dance between raw material suppliers, shipping companies, parts and sub assembly factories, and the final assembly plant. It allows the most efficient use of capital and space, eliminating the need to tie up funds in unnecessary inventory and warehousing space. Throw in the fact that it is a global supply chain with all the complicated logistics that it entails, and it is truly impressive how it all works… until it does not. The events of the past eighteen months showed us how delicate it all is when various parts of the “Just in Time” manufacturing system start to fail. My father used to always tell me, “We are on an island and things happen. It’s always better to be prepared.” I lost that battle with him, and I am glad I did. It is what allowed us to be able to serve the island after Hurricane Maria in 2017 and the subsequent collapse of the electrical grid.
I believe many companies will be moving from a “Just in Time” to a “Just in Case” inventory model. Anybody that has tried to purchase a car, compressor, forklift, or any relatively complicated piece of machinery has encountered lack of inventory and long lead times. I think enough people in all levels of management have been shocked by the effect all this has had on their business. I suspect this will be the trend for a few years until the supply chain recovers to its post-pandemic reliability. Then I have the suspicion that once the memory of the pain of the supply chain wanes, the desire to post stronger profits for the next quarter will bring back “Just in Time.”
“Victory comes from finding opportunities in problems.”
– Sun Tzu
I see the dysfunction in the supply chain as a tremendous opportunity for NARSA/IDEA members. NARSA/IDEA members tend to be incredible problem solvers. I am constantly amazed at the solutions our members come up with that are unique to their markets and customer base. I have always loved visiting radiator shops in whatever part of the world I happen to be travelling in. Some of the most ingenious ideas and repair methods I have seen come from areas of the world that do not have parts readily available for fast delivery. These shops tend to be forced by circumstance to come up with innovative ways to keep their customers’ equipment running. Let’s just say there are not many Pep Boys stores in rural Cambodia. While some of the methods I witness are quite unorthodox, others are brilliant, and I try to incorporate them into my business. I enjoy sharing some methods that we perform at my facility that may help their business as well. At the end of the day, they do what they must do to get the job done and satisfy their customers’ demands.
It is in this spirit that I encourage all our members to take advantage of this supply chain disruption. This is the time when that big customer that you have always wanted but was never quite receptive to your sales calls may be receptive. Perhaps their long-time radiator supplier cannot produce their parts or now has a lead time that does not work for them. Now is the time that they are feeling the pain and would be open to alternatives. Maybe that large dealer who only wanted OEM DPFs would be more receptive to an aftermarket solution because of the long lead times. The customer who only wanted new oil coolers and not a re-cored unit may have a change of heart when the lead time on the new unit is now 14 weeks. The point is that now is the time that you can prop open that door that may have been shut for a long time.
I am quite regularly shocked at the amount of times I speak to fellow NARSA/IDEA members seeking a supplier for a part only to find that there is a NARSA/IDEA member that makes it that I was not aware of. Leverage your NARSA/IDEA membership, and reach out to find that hard to locate part or supplier that can fabricate it for you. If you aren’t welding aluminum, now would be a good time to invest in a machine. Get your salesperson on the road and visit those clients that would not give you the time of day 2 years ago. I have found that price is no longer the driver in this market, but rather if you have it and how fast can you deliver. I encourage our members to act quickly as this opportunity will not be here forever. As William Arthur Ward once said, “Opportunities are like sunrises. If you wait too long, you miss them.”
Cooling Systems Caribe
Aibonito, Puerto Rico
This editorial was originally published in the August/September issue of The Cooling Journal
Hello Bobby! Thank you for sharing your experience and thoughts, “Just in time” method still works for managing inventory in an effective way. It can really help any business model.