Navigating The Supply Chain Crisis
No matter the industry, your business has likely been impacted by supply chain issues. Stan Spaulding, Director of Supply Chain at Interstates, answers the questions below about the current state of the crisis and how Interstates is fighting to be proactive for our clients during this challenging time. You can also read how to leverage design in this crisis in part two of this series.
How has the global supply chain crisis impacted the markets we work in?
We’ve seen dramatic price escalation over the last two years, anywhere from 50-400%. In terms of availability, most commodities that were affected earlier in the crisis like steel, conduit, wire, and PVC are now readily available and on the shelves again.
The biggest problem now is the chip shortage. It’s impacting automation components, electrical switchgear, circuit breakers, and panels – anything that has a chip. Lead times are the longest we have seen. Items that used to have lead times of a few weeks are now out to five months to even a year or more.
What have you seen specifically on Interstates projects?
We’re seeing significant, unprecedented delays on large equipment like MCCs, switchgear, switchboards, large transformers, etc. We are currently looking at about a year to get a switchboard. Clients are very concerned since these delays can jeopardize their project dates. While component delays are beyond our control, we’re doing everything we can to get ahead of it and have proactive measures already paying off.
What are we doing to help our clients through these challenging times?
Availability is the primary concern, so we’re investing in our supplier partnerships and communicating regularly to maintain a personal connection. Interstates is proud to have strong, time-tested ties with suppliers, and our relationships have paid off. Many companies have to endure material allocations based on last year’s sales, but we’re lucky to partner with suppliers who let us order as needed and even expedite our orders.
Our biggest proactive measure has been buying ahead several million dollars’ worth of material. This is a new approach for us, but it’s given us the means to keep our clients’ projects going now and into the future. Material buyouts have also helped us avoid some price escalation.
Do you have any examples of projects impacted by the supply chain crisis and how we responded?
A couple of months ago, one client in South Dakota needed an I/O PLC card for a start-up. They called us late on a Friday, desperate for this component that is not readily available. The great news for them was that we had this card in stock at one of our vendors, allocated just for Interstates due to a pre-negotiated buyout. Our vendor’s normal stock was depleted, so buying this part ahead allowed our client to meet the start-up deadline.
What advice do you have for clients navigating supply chain issues?
Planning early is more important than ever. We’re urging our clients to get materials ordered as soon as possible in the project cycle. Don’t wait. Having material on hand is absolutely critical right now, and pricing becomes secondary.
It’s also important to understand everyone is facing the same problem. We’re giving every client everything we can, and if we engage early and stay proactive with ordering, we can all weather the storm.