Amid raw materials shortages, extended lead times and price increases, suppliers and distributors say to over prepare and over communicate.
By Maura Keller
When working seamlessly, supply chain management and logistics solutions effectively combine manufacturing, warehouse, distribution and transportation processes so that end users have access to products when and where they need them. But when there’s a proverbial “kink” in that chain, the entire process breaks down and can have dramatic impacts on an entire industry. Today’s supply chain issues are requiring manufacturers, distributors and end users to rethink their business processes and reevaluate their needs.
Bo Sasnett, CEO of equipment distributor D&H United Fueling Solutions Inc., is seeing supply chain issues across a variety of products and materials. Specifically, both demand and supply chain issues have impacted fiberglass and steel storage tanks (both underground and aboveground), piping, conduit, steel for buildings, electronic parts and even fuel filters.
“There is a robust demand for the industry’s products and services. This demand, combined along with the general supply chain issues from COVID-19, issues with key imported materials, logistics challenges and the general employment situation, has caused the perfect storm in not only the general economy but also our industry,” Sasnett said. “The biggest impacts are threefold.”
First, as Sasnett explains, in some areas, retailers are facing a challenge in getting certain replacement parts. Second, retailers and commercial customers alike are having to engage in a longer planning horizon for projects. And third, supply chain issues are causing prices to increase on certain materials and products.
Bryan Kohler, vice president and general manager at Acterra Group Inc., says the biggest supply chain issue impacting the petroleum equipment industry is the procurement of materials and materials costs. The Marion, Iowa-based company is both a supplier and manufacturer in the petroleum industry.
“We typically see one cost increase a year from most of our vendors that starts at the beginning of each year. As of today, we have seen multiple cost increases as our suppliers are not able to hold their costs due to the volatility of their raw materials,” Kohler said. “Of course, those suppliers are having problems with procuring raw materials, which in turn, causes longer lead times for us to procure their product and thus causes our customers to have extended wait periods.”
Acterra Group is currently unable to hold pricing for an extended period on its shop-fabricated above-ground tanks due to the volatility of the steel industry. “Our costs for steel have increased dramatically over the year compared to the same time period the last couple of years,” Kohler said.
Experts at Northwest Pump, a West Coast petroleum equipment distributor, say raw material shortages of things like resin, steel and microchips are impacting gas stations and c-store owners’ ability to install new equipment and maintain existing gear.
“As a distributor, our takeaway to combat the supply chain issues is to over prepare and over communicate as problems arise,” a Northwest Pump spokesperson says. “This can be tricky with things changing so quickly, so overstocking items and expanding our warehouses has become our new normal.”
Joe O’Brien, vice president of marketing for national equipment distributor Source North America, also points to extraordinarily long lead times on made-to-order items.
“Underground storage tanks can be a year out. Various fiberglass pipe and fittings have unreliable supply due to manufacturers not being able to gets resins to make the items,” O’Brien said. “Some common items for normal maintenance, such as fuel filters, are susceptible to the same kind of stockouts that surprise you when your brand of cereal or crackers is not on the shelf at your local grocery store. This makes everyone scramble, and the shortages often come with very little advance notice.”