Article • Sales Tip
Responding to Supply Chain Disruption –
Written By Jim Heilborn, INDEAL • January 20, 2022
You don’t need to be a distribution expert to know about the ongoing disruption to the supply chain. Lead times for everything from toilet paper to semi-conductors to desk chairs have been extended. Many JIT (“Just-in-Time”) programs have suffered and become ASAP.
International trade increased exponentially after World War II increasing the use of the global supply chain. Many of the products used in the office furniture industry are manufactured offshore. As one supply chain expert wrote, “Today, it’s not unusual for a product to cross dozens of borders before reaching a consumer, with each link in the chain highly specialized in a specific production step. This has allowed companies to source production where it is cheapest and deliver a wider range of goods at lower costs to consumers. But it can also create problems.” (“What Happened to Supply Chains in 2021? | Council on Foreign Relations”)
As COVID-19 vaccines became more widely available in the United States, the economy reopened and consumer demand started to recover. Unfortunately, companies in crucial sectors such as warehousing and ports of entry have struggled to attract and retain workers. Container ships are often found sitting offshore or at the dock, waiting to be unloaded.
With all that in mind, what are some things that need to be considered or re-thought?
- Don’t lose your expertise and key people. Think beyond short-term disruption and focus on long-term survival. That may involve a shift in work schedules, staffing, and hours of operation.
- Use this time to re-evaluate your business and make some tough decisions. It might be a good time to re-organize some areas. Assess the value of products, spaces, equipment, programs, and even people to ensure they contribute to the bottom line now and in the future. This might even include parting ways with low-profit customers who are a drain on resources and working capital.
- Prepare to manage demand. Create an in-house stocking program for the most profitable and popular products and parts. This is tricky for dealers without warehouse space or who are used to doing mainly custom projects. It requires some re-education of salespeople and consumers who aren’t used to selling or “buying off the shelf.”
- Create “standards programs” for clients and stock those products. The use of real-time inventory management systems can help ensure that the purchase of stock products matches the rate of sale.
- Use leading indicators like sales forecasting to guide your business and avoid labor shortages in design and installation. Just like products, there are lead times associated with finding, hiring, and training your staff. Even outsource providers are facing labor shortages and aren’t always available to fill the gaps.
- Be transparent and honest about extended lead times and encourage clients to place orders as early as possible in this “first-come, first sell” environment.
- Monitor vendor performance for their products, response time, pricing policies, lead times, delivery, and marketing support. Can they meet your needs?
- Monitor and measure your ability to respond to client demands. Is your competition doing a better job or is this an opportunity to increase your sales and market share?
With challenges comes opportunity or in the words of the Dalai Lama, “Whenever there is a challenge, there is also an opportunity to face it, to demonstrate and develop our will and determination.”
Jim Heilborn is INDEAL’s Training and Development Consultant specializing in the office furniture/products industry, working nationwide with dealers, manufacturers, and service providers. Jim has been associated with INDEAL since 2011, focused on training and dealer development. Jim can be reached at email@example.com
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