TRENDS: SUPPLY CHAIN CHALLENGES AT SCELZI
As we near the end of 2021, the good news and the bad news for the work truck industry seem to be coming in equal parts. On the good side, the bipartisan infrastructure law approved by Congress last month appears to finance enough actual infrastructure projects to boost construction spending for the next 3-5 years, further ramping up demand for work trucks. No matter your political viewpoint, this appears to be good economic news for our industry. “While I hate wasteful government spending,” notes Gary Scelzi, “the lack of investment in roads, dams, and highways over the past decade or two has not been good for anyone.”
On the other hand, the global supply chain issues that have hurt our industry might be highlighted by the microchip shortage — but they are certainly not limited to that one key component. The bigger picture reveals some much deeper problems which may not be corrected so soon. Shipping ports in the US are clogged with container ships that can’t unload cargo nearly as quickly as they could in the past. One industry estimate pegs the average time to unload a container ship at 9-days for California ports — three times longer than it took just 2 years ago. And once unloaded, the time for pickup and delivery of those containers has also been lengthened. Finger pointing at who is to blame is aimed in several directions, but the result has been delayed materials and components for many industries, including commercial work trucks. And all this is inflating the prices for those components, too. Some ports and shippers charge storage fees and other penalties for slow turnaround that is increasing expenses at a phenomenal rate.
The team at Scelzi Enterprises has done their best to navigate through these choppy waters, but it has not been easy. Switching from single-source suppliers for key components to multiple sources has become an ongoing project in 2021, and one that has taken time and resources away from other activities. “We have sometimes been loyal to a fault,” notes Scelzi, “and stuck by our suppliers due to our long history with them. But there comes a point when you have to consider multiple backup sources for those times when lightning strikes in the supply lines of those same suppliers.”
A recent example at Scelzi involved their mudflaps. Having a single supplier for years, their Purchasing team saw little reason to find another company that could imprint the Scelzi name and other marketing information on their rubber mudflaps. That is, until a shortage of rubber early in 2021 disrupted the steady flow to one long-time supplier. “We were upset that something as low-tech and simple as mudflaps might slow down product delivery for even a day, but it happened,” notes Scelzi. “We even had to send out blank mudflaps with our truck bodies for a week or two, while we waited for a backordered supply to arrive at our primary supplier, and at the same time we secured a 2nd supplier to act as insurance for the future. We realize now we should have done this sooner, but it takes so much time to find a new supplier who can meet our quality requirements, that we just could not justify doing it before now.”
After the mudflap experience, the team at Scelzi is looking at other single-source suppliers with a much more critical eye. “We are still very loyal to key vendors but can’t afford any more supplier delays that cause such damage to our timelines,” adds Gary. “Whether it be a shortage of raw materials, or a labor shortage, or just hiccups in their internal operations, we have determined we need to buy a little more supplier insurance for the future.” And that seems to be a trend for many companies in the work truck industry.
For more information, contact Scelzi Enterprises or visit www.seinc.com