If the story of 2020 was COVID-19, the story of 2021 might be the massive supply chain disruption that has blown across the world in the pandemic’s wake.
The global disruption has created a waterfall effect in which raw material shortages, shipping delays, labor and capacity shortfalls, and high demand have downstream effects on our production.
As manufacturers of medical carts, HUI has not been unscathed by the logistical firestorm. We’re seeing increased lead times and material costs across the board. It’s meant that we’ve had to adapt to the circumstances to continue supporting our customers.
Can anything be done? Of course! Our supply chain and project management folks at HUI have been working hard to get our products fabricated, powder-coated, assembled, and shipped in as timely a fashion as possible. Here’s what we’ve been experiencing, what we’re doing about it, and what we’re focused on now in order to get our customers what they need when they need it.
Steel:
A combination of tariffs, steel mill acquisitions, higher-than-anticipated demand during the pandemic, and the US labor market shortage have all conspired to create historic price increases in the steel market.
Read more about factors influencing the steel market here: https://www.mining-technology.com/comment/us-steel-prices-remain-high-into-2022/
Biggest Impact: The benchmark price for hot-rolled steel is up over 200% from January 2020 through August of 2021. This increase has had impacts across the US manufacturing industry, and our work is no exception. The increase in the commodity price is amplified down the processing chain, with some types of steel seeing an up to 500% increase during 2021.
Secondary Impact: specific grades of steel availability are hit-or-miss. One gauge and/or type of steel may be available one week, and impossible to get the next.
What it means: We’ve had to pass price increases along to our customers to account for this sharp increase in materials and we’ve had to work harder to find steel to fill orders and keep production running.
What we’re doing to mitigate the impact: Our supply chain team is working hard to minimize the disruption to our operations. We’re forecasting out our requirements with suppliers as far as possible, casting a wider net to source steel from multiple suppliers, and securing larger contracts in an effort to move up in priority.
Options for customers: Work closely with your sales rep to forecast orders as far in advance as possible. More predictability and lead time give us more time to make sure we have the metal we need to fabricate your cart.
Powder Coating Paint and Finishes:
Major coatings manufacturers are running short of raw materials and seeing increases in chemicals used in their production processes across the board. A “perfect storm” of upstream issues including shipping container vessel backlogs, the 2021 Texas winter storm, explosions at resin factories in Asia, and the underestimation of post-COVID demand have disrupted the coatings industry in a big way.
Read more about the factors behind the paint and coatings disruption here: https://www.pfonline.com/articles/coatings-industry-struggles-with-supply-chain-disruption
Biggest Impact: Lead times.
Secondary Impact: Price increases of up to 20% on the material we use to powder coat our medical carts and other products.
What it means: Our suppliers are running short on many specialty colors and lead times have gone from 10 days to 10 weeks in some cases. This has the biggest impact on customers with custom color formulas or specialized finishes for their products.
What we’re doing to mitigate the impact: Our supply chain team has increased our safety stockage numbers. They’ve also extended forecasting up to 12 weeks with our paint suppliers. For a commodity item that we usually don’t have to worry about, finish and coating availability had become a critical item to our supply chain.
Options for customers: Again, keep tight with your sales rep to help forecast your needs in advance. If you anticipate needing carts in six months, let us know now! Another consideration is to accept an alternative color that may be easier to source if it works for your product.
Plastics:
Biggest Impact: The availability of chemical components used in plastics production has been disrupted by the same issues that have affected other materials. The contraction of supply has been caused by global shortages and delays of raw materials similar to those found in the coatings industry. In addition, the US labor market shortage effect is affecting our local plastics suppliers.
Read more about supply chain disruption in plastics here: https://hbr.org/2021/03/the-latest-supply-chain-disruption-plastics
Secondary Impact: Price increases from 5 – 15%
What it means: We use local, US-based plastic suppliers to provide trays, faceplates, covers, and other components for our custom medical carts, but they are seeing upstream effects from this disruption. In the past, the typical lead time for these components was less than a month. We are now seeing lead times of two months – and in some cases up to 150 days!
What we’re doing to mitigate the impact: Once again, our supply chain team and project managers are working hard to give our suppliers as much lead time as possible. We are forecasting as far in advance as possible and keeping our communication tight to make sure our jobs get the priority we need.
Options for customers: Other than forecasting your needs in advance with your project team at HUI, consider using common plastics and colors whenever possible. Making the switch may not be an option for products that are already in production, but choosing the most commonly available materials in new designs may save headaches in the future.
Manufactured Components:
Biggest Impact: Overseas shipping and movement of goods through major US ports has been disrupted. Caster lead times have gone from 4-6 weeks to up to 20 weeks.
Read more about the shipping crisis here: https://www.businessinsider.com/shipping-delays-china-supply-chain-record-ships-stuck-california-ports-2021-8
What it means: We fabricate the sheet metal portions of our carts right here at our facility, but there are dozens of other component parts that we source for each project that is assembled and shipped from HUI. For example, casters, cast aluminum bases, fasteners, and mounts all have to be here and ready to go for the cart to come together.
Luckily, most of our component pieces come from domestic suppliers and have not given us too much trouble as of this writing. Increased demand for manufactured goods overall has impacted the availability of certain SKUs, but for the most part we haven’t had issues sourcing fasteners and other components. One issue we have seen crop up is delayed shipping from overseas caster manufacturers in Europe.
What we’re doing to mitigate the impact: In addition to extended forecasting with our suppliers, we are kitting fasteners, baskets, and other components for our customer projects far in advance to double-check all SKUs so they don’t fall through the cracks.
Options for customers: Although it’s not always an option, you can accept alternate caster colors based on availability if your design allows for it.
