By Bob Miller, President of Coward Environmental Systems
In recent years, our industry has grappled with significant supply chain challenges, with delays becoming an all-too-familiar refrain. While the global logistics landscape faced disruptions during the pandemic, it prompted a collective effort to fortify infrastructure, stabilize systems, and eliminate bottlenecks. Although strides have been made in ensuring timely material delivery and stabilizing costs, the return to pre-pandemic timelines for manufactured goods remains elusive.
The United States is actively investing in enhancing its transportation infrastructure, pouring resources into roads, rails, and ports. While ongoing projects are improving infrastructure, the logistical bottlenecks of yesteryear no longer seem to be significant contributors to current supply chain issues. Moreover, the U.S. is committed to reducing reliance on foreign manufacturing, with initiatives underway to establish domestic production of critical components like microchips.
Labor Market Dynamics
Conversations with manufacturers in Europe and the United States reveal a persistent shortage of skilled workers. This scarcity is attributed to a variety of factors, including the shift to one-income households during the pandemic, a rise in independent workers, and the anticipated retirement of a significant portion of the workforce. The challenge is exacerbated by a reluctance among younger individuals to pursue careers in manufacturing, leading to employment gaps throughout the supply chain.
The construction industry faces a new reality with unpredictable lead times for equipment. In response, some buyers release orders prematurely with incomplete design requirements, causing challenges for suppliers, which cannot order components without approved submittals. Without a final design criterion, the project’s lead times are typically not improved.
Just-In-Time Manufacturing Challenges
The once-efficient, just-in-time manufacturing model encounters new hurdles amid the slowed supply chain. Manufacturers are adapting by expanding capacity, diversifying material suppliers, and fostering streamlined partnerships with suppliers and distributors. These initiatives aim to reduce lead times and enhance overall resilience.
Expedited Orders and Lead Time Impact
While an overheated economy prompts buyers to pay premiums for expedited deliveries, this practice can exacerbate lead time issues for non-expedited orders. In response to supply chain delays, manufacturers are exploring strategies such as expanding distribution, increasing staff, and establishing more efficient partnerships.
For example, Smardt and Buffalo Air have recently expanded their manufacturing capacity. Many manufacturers are increasing the number of materials suppliers, expanding distribution, increasing staff, and creating more streamlined partnerships with both suppliers and distributors.
While the supply chain has improved since the challenges of two years ago, lead times for certain critical components remain a concern. Custom air handling units, for example, still average around 35 weeks, and electrical distribution components extend beyond 50 weeks. A return to a semblance of normalcy is anticipated within the next two years, barring unforeseen economic events.
We're Ready to Help
As the industry collectively strives to reduce delivery times, enhance quality, and maintain price stability, collaborative efforts and strategic planning will be essential. For those seeking assistance in navigating these challenges, we stand ready to provide guidance from the proposal stage onward. Contact us today to initiate a discussion on streamlining your project, adhering to timelines, and staying within budget. We are here to help facilitate a smoother construction process.