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Navigating Supply Chain Challenges in the HVAC Industry

January 25, 2022

Allie Perez | US Boiler Report

By: Allie Perez

If you are looking for good news about the state of the supply chain, look elsewhere. The consequences of the supply chain shortages and delays are felt daily by HVAC business owners and contractors. The cold hard truth is that the supply chain issues, not to mention inflation, are showing no signs of improvement any time soon. Furthermore, many analysts hypothesize that the current state of the market is the new norm and will only continue to get worse.

 

What happened?

After the first COVID-19 pandemic wave, the demand for manufacturing and construction goods spiked. People went back to work, construction increased, and so did the demand for product. However, the ongoing pandemic crisis is causing domestic production to be at an all-time low. As a result, The United States is relying heavily on imports.

Yet, the pandemic is creating massive, worldwide labor shortages in the transportation and distribution industries, affecting delivery timeframes, availability of products, and the final cost of those products. Additionally, bottlenecks at ports are causing industry-wide delays. Lack of labor and factory closures have caused substantial increases in freight costs. To further complicate things, uncommon weather incidents are ripping across the country. Record low temperatures are causing electrical outages, halting manufacturing and distribution. Sociopolitical factors are also impacting the supply chain.

Labor shortages, delayed shipments, and lack of product caused by the pandemic, along with rare weather events, have created a hellscape for the supply chain.

 

What Next?

To summarize; demand is up, supply is down, and every industry is feeling the instability. The brunt of the supply chain issue and subsequent inflation feels as if it rests solely on the shoulders of individual business owners and contractors. Since analysts agree that there seems to be no end in sight to the global supply chain challenges or inflation, creating a business plan to account for supply and energy shortages is the safest bet.

 

Create a sustainable plan

Assess and reassess business expenses

Evaluate current costs of doing business and expect increases going forward across the board. Consider updating inventory costs more frequently to ensure that price increases are current and passed onto the customer. While manufacturers, suppliers and business owners are trying to find new ways to lower costs, most are forced to pass the inflation they pay onto their customers.

Equally important, be transparent to customers about the final price and the timing of when product will arrive, especially if a delay is occurring.

 

Protect your assets

As inflation affects every industry, workers will feel this in their pockets and may inquire for wage evaluations and raises. This could drive up already high turnover rates if employees can find better-paying positions elsewhere. Ensure you are offering competitive wages to attract and retain your most valuable asset!

Continue to foster relationships with suppliers. Suppliers, accustomed to tense interactions during the supply shortage, greatly appreciate understanding and patience. A strong supplier relationship, with realistic goals and expectations, could help navigate this difficult time. Revisiting purchase history and keeping common inventory items in stock could save a company from future roadblocks on the supply chain. The safest business method is to accept change and plan for it.

 

COVID-19 variants and potentially another winter of disastrous weather affirms the analyst’s speculation that high prices and limited stock is the new norm for business owners. It’s best to start planning!


Allie Perez is the CEO & Founder at Texas Women in Trades, Owner/CEO at Allie Katz Business Services and Consulting, and Director of Operations at Mr. Plumber Plumbing Co.


 

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Filed Under: US Boiler Report

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