Your behavior appears to be a little unusual. Please verify that you are not a bot.


Breaking down a supply chain like no other

By |  July 27, 2022

The following transcripts were edited from two concurrent discussions that took place June 8 at the 2022 Pit & Quarry Roundtable & Conference. The transcript from one session begins on this page while the transcript from the other starts later on. Both conversations were edited for brevity and clarity.

Says Kilgore Companies’ Scott Alexander: “I almost feel a little bit guilty that we really haven’t had a significant problem due to supply availability.” Photo: PamElla Lee Photography

Says Kilgore Companies’ Scott Alexander: “I almost feel a little bit guilty that we really haven’t had a significant problem due to supply availability.” Photo: PamElla Lee Photography

P&Q: Supply chain issues have been in place for the better part of two years, and there is seemingly no end in sight for the many issues at hand. For everyone: What specific supply issues are at play right now? What are availabilities like for equipment and parts? What are typical lead times like, and do you expect those to get better or worse? What impact are labor shortages having on deliveries? How has the cost of freight been affected? Might fuel shortages become a factor that sets the supply chain back even further? For producers: How have supply chain dynamics changed your capex planning? Have you already placed orders for 2023? For equipment manufacturers, dealers and others: What has your experience been like manufacturing equipment and parts this year and, ultimately, getting it to customers? What are your messages to customers at this point? Do you continue to experience shortages in raw materials? Are you experiencing other shortages? How has the state of the supply chain changed the dynamic between manufacturers and dealers? Similarly, how has the dynamic changed between manufacturers/dealers and end users like aggregate producers?

SHELDON SHEPHERD (TECWEIGH): The biggest question is when is this going to end? Everybody thought that was 2022, and now there are a lot of 2023 things. Our biggest issues are related to electrical and electronic components. We’ve been able to get by [with] substitutions, but sometimes we’re having to substitute substitutions. It creates real challenges being able to continue to ship.

Ross

Ross

PAUL ROSS (DOUGLAS MANUFACTURING CO.): Having a domestic supply chain has helped us navigate the situation pretty easily. Getting material is not so much of an issue; it’s just what you have to pay. If you have a more global supply chain network, I think the effects have been much higher than if you’re pulling locally.

CORY DANNER (ARCOSA AGGREGATES): I guess we’re fortunate that we’ve never gone without [something], thanks to a lot of people in this room. You guys planning ahead and building your own inventory has had an impact.

We’ve done a little bit of that, but a lot of the efficiencies – the predictive maintenance, the standardizing – is all up to us, as well as multiple plants across the country. You’ve got to have one part that fits multiple operations so we’re not dependent on our local vendor to have it on the shelf for us.

We’ve done some critical-path thinking of what item could shut us down for a long time because it has a very long lead time – and where are we going to locate that, whatever that part is.

Also, we believe in predictive maintenance. It used to be you would start your quoting process and get your bids in. Within six or eight weeks you’re going to have whatever the supply was that you were looking for. Now we’re looking further out and starting to communicate with the suppliers that we’re going to need this [and] here’s our order.

Then, they say: ‘Well, 12, 18 [or] 20 months’ – whatever it is. You say: ‘OK, I’m on schedule for that. I’ll be OK.’ So it’s more planning and more [predictive] maintenance that just helps us through problems.

SCOTT ALEXANDER (KILGORE COMPANIES): I almost feel a little bit guilty that we really haven’t had a significant problem due to supply availability. It’s [about] forced planning and pushing out the lead time.

It’s relying a bit on suppliers to carry inventory of items we know we’re going to need and, at the same time, recognizing – whether it’s belting or different parts, tires – they’re going up significantly. So we’re building a stockpile of that. Maybe in a way we’re somewhat adding to the supply chain issue because we’re maybe getting more than what we need right now. But that’s just all part of the planning and process.

I would just say that these are difficult times. From a customer’s standpoint, we’re figuring out and learning who the best partners are and those that are looking at what our needs are and making sure we don’t run out. Because at some point in time, this is all going to level out. It’s all going to be fine, but we’ll also probably be able to distinguish between who were really good partners and who were not.

Photo: Asselin

Asselin

AMY ASSELIN (JOHN DEERE): As we think about our customers and dealers, one of the things we’re doing is looking to forecast out farther – trying to get a better crystal ball, if you will, and then plan more internally.

Like many manufacturers, we’ve gone to allocation rate of equipment and available build spots to make sure we’ve got good coverage across our dealers. We’re looking at machines that are sold already that can get put to work versus sitting on our rental yard. Those are the typical things we’re continuing to do.

As we go back, then, to managing our own manufacturing operations: I think with our experience and what we’ve seen over the last few years – particularly with COVID – are the supply base challenges and not getting material. If you go back to the root cause of why that happens, it’s usually labor. It’s very similar to what our customers are experiencing in their own operation.

We’ve had instances where we’ve sent our own employees over to a supplier to give them labor to keep our part going. So we’ve gotten very creative to make sure we can maintain a supply as much as we can.

JOSH INGLETT (SUMMIT MATERIALS): An area where we’re seeing significant impact is downstream. Cement in the U.S. is primarily at capacity at this point. Domestics are sold out. We’re seeing a pent-up demand for residential construction cement. Similarly on the asphalt side, [it’s] availability at plants.

In our business, we’re not feeling an impact on the production side but certainly on the demand side. There are supply chain issues there where the customers are based.

DAVE MCCRACKEN (ASTEC): We (the industry) have a supply chain issue. There were many who mitigated it – manufacturers, distributor partners, customers – due to their proper inventory planning. It’s that three-prong attack.

NEIL HOOBLER (SUPREME MANUFACTURING): We manufacture floating clamshell dredges, which are a big-ticket, long lead-time item. We deal with several vendors in [the room]. Even though we might not need [something] for a year or 14 months, we give them the order as soon as we get the order to make them plan accordingly. So that’s how we mitigate some of our supply chain issues.


Comments are closed