FEATURE STORY

Supply In Demand

By: R.D. Gibson

One good thing to come out of the pandemic has to be the time many had to explore their passions and hobbies. At one point time, many probably thought to themselves, “I could never learn a new language”; “I don’t have the time to read that book from last year’s reading list”; “I’m too busy to take care of that DIY project at home”; “I just don’t have the time to learn how to bake”; but, there were a handful of diversions people used their precious lockdown time to learn, develop, and perfect.

Many found time in their lockdown schedules to pursue recreation in a new way - outside the regular hustle and bustle. It gave some a chance to turn a pastime into a passion. Social media is filled with the videos and photos of gardens, baked goods, lavish dinner spreads, home projects, etcetera that have found their ways toward sparking joy in ways pre-Pandemic life did not.

But, imagine not being able to ‘feed’ this passion because the grocery store is lacking a handful of important ingredients, or the general store is missing a few items for the DIY project. It does not just put a damper on the projects or the activity, it sets everything back. In the same sense it could be easy to see the strain across industries. Lest we forget about the toilet paper flying off the shelves in the Spring of 2020.

Sure, there’s the concept of supply and demand, but meeting the demand and predicting whether or not those products will be sold can be tricky. An article on Fastcompany.com cited several reasons why supply and demand just weren’t seeing eye-to-eye - but mainly for the usual consumer goods, like food, devices, cars, and, yes, toilet paper.

The article talked about shipping being affected by none other than Coronavirus lockdowns, congested ports, and higher shipping rates. The five-minute read went on to discuss briefly how the workforce really has a hand in this issue; initially with layoffs and furloughs due to lockdowns, and more people taking sick leave because of the Omicron variant, there are less people to produce and transport goods. For this and, even potential, oversupply, the article stated outright, “[Companies] will have to level their production rates with demand.1”

Additionally, in a WorldEconomicForum.org article2, Edward Sweeney, a professor of Logistics and Supply Chain Management at Heriot-Watt University in the United Kingdom, discussed three main points about the supply chain issues - 1) the COVID-19 and its implications throughout the globe, 2) the impact of global economics and business, and 3) the impact on sustainability and the environment and how logistics and supply chain activities affect it. Sweeney also highlighted the unpredictability the world collectively lives in now, given our entrance into the second year of the COVID-19 Pandemic among other things. For the last few months, Guam has definitely seen the tortoise-like arrival of materials and goods; leading to sparse shelves and inventory not just in grocery stores. It does not seem to only be affecting retailers and wholesalers though, as some in the Guam Contractors Association membership have expressed just how much these supply chains woes have affected their businesses and how they have had to adapt to yet another obstacle; as if we didn’t already have enough to deal with.

Lucia Wood, Project Manager at APTIM started with how “lead times for standard materials have grown exponentially,” prefacing a nationwide shortage of materials in the mainland United States.

David Hicks, Vice President of America’s Best Electricmart, Inc. stated that the supply chain issues have affected their operations significantly. He stated how manufacturer’s are rationing their materials, which in turn has limited their items. “We’ve had purchase orders declined because we were over our allocation for the quarter,” he mentioned. Even more so, Hicks added how this has had an impact even items that they do not frequently order or are ‘specialty items’.

He went on to say how manufacturers are not accepting new customers as they are ‘prioritizing their existing customers’ due to the quantity of materials that are available. “They are not even entertaining requests if you are not an existing customer,” Hicks emphasized.

To add to that, Hicks even stated how the schedule of receiving materials has become uncertain at times; with some orders not arriving for several months past the estimated delivery date. One of the reasons was how suppliers have been late due to COVID-19 or some materials just not being available, Hicks said.

Tricia Nauta, a Procurement Specialist at Isla Coatings and Roofing Supply echoed how the supply chain woes are ‘unquestionably’ impacting their business. Nauta listed their issues “material shortages, to manufacturing and shipping delays, to unpredictable and dramatic price fluctuations”, which have all influenced their estimations, cycle of cash, and delivery expectations.

Shipping schedules have also been brought up in the discussion. According to Hicks, ocean and air freights have all been affected; stating the inland and ocean freight times sometimes increase because of trucking availability and bottlenecks at ports on the West Coast. He added how because of flights being reduced through foreign airports, some packages are arriving later than expected.

Wood stated how the only way to mitigate ocean freight was to pay high premiums for air freights. “Air freight had even gotten to the point of touch and go given the rise in air freight itself,” adding how they had to use alternate materi-

als until correct materials made their way to the island. Wood pointed to equipment or material requiring computer components in particular as taking up to 3 months longer.

Nauta of Isla Coatings and Roofing Supply said, “Our most persistent and inconsistent variable has been the inland transportation of the finished product from the manufacturer in the US mainland to the West Coast ports to ship to Guam.”

She added how an order, which would usually be a three-day trip, took more than 3-and-a-half weeks. “The location on the mainland has not seemed to matter; the inland movement of the product is delayed.”

As the island has seen the effects of the supply chain issues, Hicks mentioned how their business has increased their stock of materials, as well as encouraging customers to place orders earlier, as well as, unfortunately, plan on delays.

Hicks advised businesses to make suppliers aware of any prioritization clauses, especially if it comes to military projects, and that those are passed along to the manufacturer when asking for quotes and ordering. Wood added there isn’t much that can be done to overcome shortages for federal contractors “other than order immediately for items that you may not need for a while.” She advised to “order early”, as well, considering there is potentially more lead times on different materials.

Nauta explained how Isla Coatings and Roofing Supply works with about ten manufacturers directly to provide their specialized products and services. She said their material shortages have been reasonably between one to two months.

Additionally, Hicks also suggested trying to reach out to multiple sources to see where companies could get their materials. This was something Isla Coatings and Roofing Supply considered as Nauta said their rolodex has “multiple suppliers with comparable products to our main product lines” adding how it comes down to the product’s availability. “We’ve adapted to these issues, as a Team – and not to forget the customer service part of business - by keeping our customers updated and informed on increased cost, shipping delays, etc.”

For Nauta and the Team at Isla Coatings and Roofing Supply, it comes down to communication. She encouraged those looking for supplies and materials to reach out to and work with local, technical experts who have relationships with manufacturers and who can help with your materials shortage issues, especially looking at equal alternative products. “It does not mean there is a ready solution, but it increases the odds of keeping the project moving forward,” Nauta emphasized. She added to be prepared for delays and order more product than required. Nauta continued saying that these supply chain issues have lasted longer than anyone could have predicted. “One strategy is to anticipate both product shortages and product demand in your customer base,” she started. This would ensure there is enough supply for those in anticipation for the material shortages before the products are no longer available for an undetermined amount of time. Though it could pose a challenge, it is helpful for customers. Nauta went on to say the importance of knowing a company’s monthly consumption of a product and maintain the inventory. “This preemptive mindset relieves pressure caused by on-the-spot ordering due to low or no stock levels as a project evolves.”

Sweeney wrote in his article in the World Economic Form that businesses need to become resilient and adapt to changing times, and in turn, the customer needs to become resilient and adapt, as well.

Richard Howells wrote for Forbes.com how there are “four trends that will shape the future3” - resiliency, sustainability, visibility, and technology. In the contribution, Howells writes how experts foresee more obstacles, but what businesses can do is get ahead of the game and reconfigure their manufacturing, as well as diversify where they get their materials.

Greater focus needs to be put on sustainability; in the advent of learning about how industries affect the environment, the emergence of environmental, social, and governance (ESG), and reinforcement of the circular economy as “our global supply chains sit right in the middle of these challenges”. Additionally, Howells wrote about using important data to make decisions about designing, manufacturing, and delivering products to consumers, and using technology as the means to gauge all those points.

Wood hopes “the world rights itself with labor and materials” adding how factories need to be reopened. Nauta said point blank to “presume the next 12 months will be like the last 12 months; relief is not in sight.”

It doesn’t matter where the world saw itself in 2020, or 2000, let alone where it sees itself now. They are three completely different entities at this point, and will be completely different within the next year - who knows, really? Sometimes it’s a matter of expecting the unexpected, adjusting, and preparing beforehand especially. Now, don’t go stocking up on Cream of Tartar or potting soil - some of us need that for our cookies and garden projects. However, it seems imperative now more than ever to consider the possibility of this situation changing in the foreseeable future and being ready for that change.