Cover Story Dave Baiocchi
Operating from a vacant lot As we bring 2021 to a close, we are just beginning to ascertain the new realities of a changing workforce and economy. A pandemic we all believed would be firmly in the rear-view mirror by the summer of 2021 has continued to infect not only our populace, but also our workforce, our corporate policies, and our economic outlook for the foreseeable future. Although some would argue with me, this author believes that the ongoing responses to the pandemic have become less about the science of eradication and therapeutics, and more about political control over private enterprise, public education, and basic personal freedoms. No, this article will not be a political argument on either side of the ideological spectrum. There will always be a cacophony of noise created by the 24/7, social media-driven news cycle. Behind this noise, however, there appear to be more permanent and serious ramifications linking the effects of the pandemic to developing demographic, societal, and educational realities that pose an existential threat to the distribution status quo. We need to forecast what this means to us on a regional basis, and what preparations we need to make to insulate our business from the coming storms. (Yes, there will be more than one). I want to address some of the most urgent challenges both this month and in the January edition and suggest ways that we can establish defensive measures that will actually strengthen our hand, and prepare us for the realities of the ’20s and beyond. Supply Chain Hell As I write this, there are hundreds of container ships anchored offshore and in bays and harbors, anxiously awaiting their turn to offload their cargo in the United States. There several reasons for the OHIO RACK are backlog. First, there is the We BUY & SELL continued surge of shipping Portable Stack Racks volume created by the shift Flexible Packaging to online ordering. Fueled NEW & USED by the pandemic, the shift 800-344-4164 to online ordering continues Fax 330-823-8136 to bring more products Email: ohiorack@cannet.com from offshore markets. This www.ohiorack.com 6
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December 2021
additional volume clogs an already crowded supply chain infrastructure. Second, there is a severe shortage of truck drivers to take those containers out of the ports. This shortage can be partially blamed on pandemic mandates, as drivers that refuse to accept the vaccine, are being furloughed. The pandemic also incentivized aging drivers to retire. New drivers replacing the retirees cannot get licensed as DMV’s have all experienced extended periods of pandemic-related closures and limited operations. It’s no secret that nearly everything is in short supply, and prices are increasing exponentially. It’s not just groceries and Christmas gifts either. Steel, electrical parts, tires, and other components to manufacture equipment are also unavailable. For decades, we have been able to count on stable lead times for new equipment of 12-16 weeks. Presently, I haven’t talked to one dealer that has a confirmed lead time of fewer than 9 months, with most over 12 months, and even that, is subject to change. So, how do we respond to the absence of new equipment in the marketplace? How do we prepare our customers for extended lead times? How do we survive in the meantime? As a distributor, there are certain things you must have to be able to remain solvent. Product is one of those things. You cannot issue invoices for products you cannot deliver. It’s difficult to represent your capabilities from a vacant lot. We have no control over the absence of new products arriving from the OEM. So, we need to focus on areas where we do have control. Rental Fleet Recalibration Having been a rental manager as well as a dealer principal, I fully understand the wellaccepted and proven “best practices” of a properly executed rental accounting cycle. We put units into service in our rental fleet every year with certain expectations of how long they will remain in rental service before they are considered for retirement and remarketing as used equipment. In most cases, this period is from as little as 30 months to as long as 5 years. Many factors go into calculating optimum rental fleet cycles.
