During COVID, the home building industry experienced a global supply chain disruption, and the impact of this is still radiating across the world, affecting all consumers across different industries — including the centralized mail equipment industry.
Here at Florence, we have certainly been greatly impacted by supply chain issues like other building product manufacturers. Coupled with labor challenges, our typical quick fulfillment turnaround has elongated. We understand the frustrations this creates for our sales channel partners as well as our end-customers, and we continue to work diligently to repair every link in the supply chain to ensure we mitigate the disruption and deliver for customers as quickly as possible.
There is no shortage of news around the supply chain disruptions impacting the delivery of products; however, much of the news focuses on consumer goods, especially with Christmas around the corner. So we wanted to share with you some background related to some of the drivers behind the supply chain issues negatively affecting the customer experience in the building products industry and specifically centralized mailbox products.
Drivers Behind Supply Chain Issues
While there are multiple factors impacting centralized mail and package equipment supply chain, there are three main drivers behind the supply chain issues impacting Florence: increased cost of materials, longer lead times and increased demand.
Increased Cost of Materials
Florence centralized mailbox solutions are primarily made out of corrosion-resistant aluminum. Aluminum costs have skyrocketed over the last year due to supply constraints coupled with exceedingly high demand. Experts in the raw materials industry are reluctant to predict aluminum cost trends for the short term, much less the long term, based on the unstable market dynamics at this time.
Extended Product Fulfillment Cycle
Early 2020 essentially shut down the entire supply chain — including many U.S. manufacturers. While "essential" manufacturing was allowed in the U.S., many manufacturers were impacted in the U.S. and across the globe. Manufacturing capacity was lost, shipping capability both domestic and international were reduced and millions of workers lost jobs or were furloughed. Later in 2020, the world tried to resume business as usual, but real cracks in the supply chain started to emerge.
From the perspective of logistics, restarting the manufacturing process after this type of disruption is extremely difficult. Manufacturing is a complex process, and for a system to move finished products across the globe, you need predictability and precision. Both were lost during the shutdown.
According to Forbes, the price of shipping containers have doubled, shipping costs have risen 13-fold, ports across the globe are congested, there is one qualified truck driver for every nine job postings, furloughed railroad workers have yet to come back in full, hurricanes have shut down rail lines, air freight shipping is 8 times the cost of sea shipping and warehouse capacity everywhere is at a bottleneck.
Even though the supply chain is constrained, demand for building products certainly is not! With home buying currently a seller's market, new home construction and building starts up and an uptick in facility upgrades and renovations, demand for centralized mailboxes is higher than it has been in years.
Planning for Disruption
Following are a few steps Florence is taking to help ease the process of managing the system disruptions, and as a customer and/or part of the supply chain serving customers yourselves, you can apply these same tactics to your own business planning as well:
Add time to your building product procurement planning cycle - a/k/a "order early".
Maintain inventory at a higher level than pre-pandemic to provide supply tolerance.
Communicate challenges as quickly as possible to your stakeholders and/or customers to help them with their own planning.
Be empathetic, listen and problem-solve with your customers and partners to achieve the best possible outcome. We are all working together to get through this disruption.
To Our Florence Customers
The supply chain is a "system of systems," so when one system is impacted in the "chain," the whole supply chain is impacted by that constraint. Product fulfillment (lead times) is still longer for all building products, and while all manufacturers, including Florence, are focused on repairing the systems to get back to typical fulfillment cycles, it is going to take some time for all the systems in the chain to get back in sync.
We truly appreciate your patience, loyalty and understanding during these challenging times. Thank you again for your support!