Supply Chain Disruption Solution
June 14, 2021
Whether you eat chicken, enjoy a swimming pool, use plastic wrap, are building a new home or building, deliver commercial roofing and building envelope solutions, or participate in virtually any other activity related to everyday life, you are being negatively impacted by ongoing supply chain disruptions taking place around the world.
As the pandemic began to rage worldwide in 2020, manufacturing was significantly curtailed and, as manufacturing began to come back online later in 2020, much of the capacity was reallocated to meet the evolving demands of the pandemic. Add a massive computer chip shortage that began in mid-2020 and is forecast to persist beyond 2021 and impact virtually every link in the supply chain. Combine these circumstances with transportation challenges including the 6 day Suez canal blockage that began on March 21, 2021, and created a bottleneck of over 350 international shipping vessels carrying an estimated $10 billion in supply chain goods with a shortage of commercial truckers that are depended on to deliver along virtually every step of the domestic supply chain. And then add one more wrinkle into the mix - the dramatic increase in cyber-attacks on large businesses. And just like that, a perfect storm is ravaging the supply chain.
Then, as the effects of the pandemic began to recede, product demand came roaring back to life in early 2021. From plastics to steel, to lumber, to computer chips, to medical services, and from manufacturing equipment all the way through automobiles, virtually every industry in the world is experiencing surging demand. And the situation is no different for the construction industry.
In Standard’s case, commercial roofing product manufacturers are in short supply of raw materials from overseas. These shortages are delaying the production of products including roof insulation and metal products produced from copper and aluminum which often can result in delays to commercial roofing projects. Add on projects that were put on hold during the height of the pandemic to the commercial roofing projects that were already scheduled, and you have the perfect storm of demand outstripping supply even for the commercial roofing business.
This is all a simple example of demand dramatically (and somewhat suddenly) outstripping supply. As the basic tenet of economics attests, when demand outstrips supply, it leads to shortages and rising prices for the remaining goods and services that are available. And generally longer lead times to complete projects.
One thing is also certain in times when demand outstrips supply - there is no doubt that supply will (eventually) catch up to demand, albeit sometimes over a longer period than is desired by many. So, how does Standard help customers manage through these times? Fortunately, a substantial portion of our business comes from our building envelope maintenance and repair division. Why is this important? Because it can allow customers to wait out these unprecedented times with a high level of certainty that their existing building envelope components (roofs, windows, walls, and foundations) can be maintained in the shorter term to deliver on their intended purpose - to keep their contents dry and comfortable. This extra time can allow larger capital improvements including the replacement of a commercial roof to be delayed until a time when supply is more in line with demand.