Possible stocking solutions for supply shortages

With an extreme shortage of labor, high transportation costs and significant wait times from supply shortages, aggregate producers are finding it difficult, if not impossible, to plan and manage production and lead times.

As 2021 ends, the demand for components, commodities and products in all sectors remains high, leaving producers scrambling to secure the resources needed to maintain production. Some experts predict it will take up to six months for delivery times and inventory to normalize. Others think shortages could continue through 2022.

While components may be in short supply, the demand for processed materials is not. To address supply needs and find ways to accommodate longer lead times, many processing facilities are looking for creative ways to manage wearables and consumables. Some process equipment manufacturers, determined to meet this challenge head on, launched programs allowing customers to better manage operational needs without a huge stockpile of materials and an initial cash investment.

Unique programs

Two options are stocking agreements and make-and-hold programs.

Designed to guarantee aggregate producers have access to screen media and wear parts when and where they need them most, these programs provide a way to easily manage inventory for shorter lead times and pricing control.

A stocking agreement outlines a customer’s annual requirement for screen media or parts at the beginning of the year. The customer commits to that specified quantity and, in return, locks in the price for the calendar year.

The inventory is stored at the factory and generally ships within 24 hours of a request. The customer is then invoiced for the quantity of product taken at the time of shipment. Customers draw from their inventory in the quantities they need throughout the year.

This system provides an option to ensure inventory and control price for the consumables customers require.

Similar to the stocking agreement, a make-and-hold program ensures an operation’s product is always available when needed, but through a different approach. In the make-and-hold model, customers commit to certain inventory volumes per shipment. When they place an order, they get that exact product and volume each time.

For example, if a customer defines 100 panels of modular screen media and eight shear rubber mounts for a vibrating screen in a make-and-hold program, these quantities will be readily available and shipped immediately upon order. The stock will then be replenished and ready for the next order.

Both programs ensure inventory so orders can be shipped immediately.

Takeaways

While the current supply chain challenges seem to have no foreseeable end in sight, they don’t have to wreak total chaos on a processing operation. With a little planning and partnership with the right vendors, operations can build a system that ensures maximum productivity and minimum headaches.

Wilm Schulz is parts and service manager at Haver & Boecker Niagara.