The International/Domestic Supply Chain Issues
GLOBAL REFRIGERATION INC.
ADDRESSES ISSUES EFFECTING MANUFACTURING/LEAD TIMES/ PRICING
What is Happening?
- The COVID 19 situation continues to significantly effect the manufacturing industry, including market segments such as auto, construction and refrigeration is included as well.
- Although, the COVID 19 situation is steadily improving demand for equipment is increasing from our customers.
- These two issues have created a global supply chain crisis.
- Factors creating Global supply chain crisis
- Shortage of Raw Materials
- Shipping Issues due to port closures
- Factories working at reduced capacities
- The crisis has disrupted the mobility and availability of most food service items including our equipment.
- Shipping and Fulfillment Struggles for equipment providers with pent-up demand now is in the equation
The Effects of the Crisis
- Longer Lead Times
- Lead times have become highly unpredictable. When Global Refrigeration gives a lead time, the lead time is based on dates Global has received from component/part suppliers. Often the components/parts orders arrive much later and or are unavailable which effects/stops production and effects lead times given earlier.
- Global Refrigeration component/parts supplier network are having the same issues with raw materials, operating at reduced capacity which result in orders for Global often arriving delayed sometimes significantly or other times, the component won’t be available for an extended period of time and another supplier has to be located.
- Every single day brings a new set of problems and some of the problems won’t even be visible until it’s too late
- One example, many vendor/suppliers that have given guaranteed ship dates and Global has followed up with to ensure delivery, call or send an email the day the parts are to arrived stating delayed arrivals.
- The Global Team will do our best to keep you updated, but this crisis has put us in a situation that changes daily but we will share all the information we have to keep our customers in the loop.
- The majority are in short supply or out of stock or have long lead times.
- The above statement does not refer just to equipment, but to components and parts necessary to manufacture the equipment.
- Suppliers have discovered raw material they use in the production of the component/part are unavailable, short supply or extended lead times which in turn results in delayed production of component/parts Global needs for production.
- Global is proactively staying updated on these issues and results in locating other suppliers, but overall, most suppliers of component/parts are in the same shape as their competitors
- The supply chain crisis with manufactured component/parts effects Global manufacturing processes by causing delays or inability to complete a piece of equipment due to a missing necessary part/component
FACTORS CREATING HYPERINFLATION
- Unprecedented and extraordinary price increases
- Raw Materials
- Constant Supply outages by key suppliers
- Increases in both demand and lead times for equipment have increased costs
- Suppliers have increased pricing multiple times in one year due to the supply crisis.
- Combine the above factors with expedited freight costs to receive components as soon as possible have greatly increased the day to day operating costs at Global.
- At this time, the likelihood of continued supply chain issues resulting in higher supplier pricing and the cost of delays in production may lead to higher costs.
The Global Response
- Global is and continues to dedicate additional resources and investments to accelerate the manufacturing and delivery of equipment with long lead times.
- Global is working with suppliers to find the components/parts required and improve communication updating order status and any issues immediately
- The price increases of all the factors that have been addressed, has required Global to increase pricing and at the same time we work proactively to ensure our pricing remains competitive.
- If the current situation does not improve, there is an expectation of additional price increases.
- The Global Team is grateful for your business and appreciate your understanding as many of the issues don’t allow our team to be more precise with delivery dates.
- Thank you for you patience and understanding as Global continues to navigate manufacturing top performing quality equipment under these extraordinary circumstances.