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commercial projects, and the plasterboard situation, but in the residential space, with new-builds, DIY and renovations, business “has just continued to grow.”
NO LET-UP IN RETAILER DEMAND
Not surprisingly, our suppliers are finding that retailers remain concerned about continuity of stock with core products and Paul O’Reilly for one says Bostik “has upped inventories of what we’re carrying locally to try to mitigate long shipping lead times for materials and stock that appear to be getting even longer.”
has been evident in some other categories.”
Coping with market supply is a story with two very different
threads for Soudal.
The good news, says Melanie Reid, is that Soudal is “on top
of things manufacturing-wise with all of our sealants and adhesives coming in from Europe, and we’re almost back to what we would consider normal in terms of shipping from Europe.
“Over the past four months we have performed much better in terms of DIFOT out of our own factories, and that includes
Shipping costs, he says, seem to be going up almost weekly at the moment, and the trend doesn’t appear to be abating.
“A classic example is the port in Singapore; while a container used to sit on the port for a couple of days, we’re hearing now that a container can be offloaded for anything from four to 10 weeks and that creates obvious logistical issues.”
Manufacturing locally however has given Bostik some clear advantages in the current environment.
MELANIE REID (SOUDAL):
“We’re certainly not recovering all cost increases by passing everything on, but we’re reviewing more frequently than we have ever needed to in the past”
glues, sealants & adhesives
“Local production of core products gives us greater control. We might have some raw materials that are a few weeks late but we can control how much of our key lines we need to manufacture and benefit from a bit of flexibility as well.”
Tony Smith shares a prime example of lead times blowing out with the caulking guns that SIKA brings in from a corporate supplier to the Asia-Pacific region. “They used to have a 60-day lead time but it’s now out to a minimum of 150 days, and they can no longer give the procurement team a price book quote.”
“However,” he adds to the positive, “our in-store, in-stock situation is quite good, usually 8-12 weeks of product, and if a potential Out of Stock arises, there’s usually enough in the supply chain and store network to get through a lean period.
“Of course, you have to bear in mind shelf life and expiry dates, and avoid stocking up on products that you won’t sell by the time they’ve expired.”
Selleys’ Darren Newland concludes that supply chain inconsistencies look set to prevail: “I think we’re in for a bit of a bumpy road ahead.”
As a result he says, “We’ve had to really look at extending our lead times and allowing for the extra issues, and we’ve lifted cover of key lines and increased our lead times on forecast.
“Those things provide a buffer and help us manage a bit better, but you’re still going to have issues around raw materials or packaging from time to time.”
As a result, Darren can’t remember ever spending so much time looking at forecasts and product planning.
“We’ve worked closely with all our customers to try to understand what they’re experiencing and the patterns they see coming through, and we’ve adjusted forecasts as we’ve needed to.
“If you’re a retailer,” he continues, “stock at the moment
is king, and carrying safety stock is very valuable in this environment, however we haven’t seen the panic buying that
the shipping time, whereas before that it looked a bit ugly at times. And I think silicone pricing is now settling down after a period during which volatility in silicone supply significantly impacted costs.”
“However,” Adds Melanie, “China, as we all know, is a different story and we have very little control over the situation there. We’re having to work to really long lead times with some of the hardware products we source from China, and then you almost just need to take what comes.
Soudal is mitigating that by “sitting on considerably more safety stock than we previously did and just working to longer lead times and trying to improve communication. But we don’t have any major out-of-stocks that we can’t cover so we’re in a reasonably good place.”
As for passing on rising costs, Melanie Reid says Soudal is doing so “where we feel it’s sensible for us, the resellers and the end users of our products.
“We’re certainly not recovering all cost increases by passing everything on, but we’re reviewing more frequently than we have ever needed to in the past.”
AN OPPORTUNITY TO REFLECT
With the benefit of hindsight, do any of our commentators wish they had tackled the challenges of the past two years any differently?
“The reality,” explains Melanie Reid at Soudal, “is that a lot of things were out of our control, so there may not be much value in trying to figure out how we could have controlled the uncontrollables.
“You’ve just got to focus on what you can control, keep the team’s focus positive, and make the best of the situation.”
Tony Smith says there’s not a lot the SIKA team could have done differently in the last year that would have made a difference to the supply line.
“When you’re dealing with chemicals, there’s a balance
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MAY 2022 | NZHJ 21