Materials have been challenging us over the last few years. There are not enough products, too many of another product, extended lead times, price escalations, logistical issues and the list goes on. These issues have created stress, conflict and margin fade for the entire supply chain. We all understood that there would be ramifications to the supply chain when the world shutdown for COVID-19, but I don’t think we realized how big that impact would be. With what we know now, how can we work together to minimize the impact on future disruptions and better work together?
Could the solution be to base demand on the end customer, not on perceived demand?
Currently material demand is driven throughout the supply chain by perceived demand. Basing demand on perceived demand leads to a wild swing of needs that is not connected to actual demand driven by the end customer. This results in overstocks and understocks, which amplify shortages that we have seen in the last few years.
To base demand on the end customer, we need to share more information and not be afraid that the information we share will be used against us. There are two things that we can start providing that will help better forecast needs. First is work currently in process, and second is based on the projections for future sales.
With work in process, we can forecast material needs based on construction schedules and accurately update them daily, weekly and as the schedule changes. This will allow the supply chain to better plan to have the materials we need on hand. With future sales, we can provide projected material needs that are tied back to projected schedules and update them as information changes. This will allow the supply chain to do better resource planning and make sure we have the correct products when we need them.
This is easy to say and a lot harder to do.
However, if we are successful and base our projections on the end customers, we will have better cash flow, higher profits, less waste and better product availability.
On another topic, our national convention and trade show is being held March 13-17 in Las Vegas. The program has content for everyone in our industry, from executives to craft workers. It is a wonderful place to see new products, be exposed to innovative ideas and leave with more knowledge than you came with. I encourage each of you to register and attend so we can better our industry together. Visit www.awci.org/convention for details.
In addition to being 2022–2023 president of the Association of the Wall and Ceiling Industry, Travis Vap is CEO of South Valley Drywall, Inc. in Littleton, Colo.