What are some supply chain issues RL Hudson is facing?
In today’s supply chain, challenges are around every corner and driven by a wide range of factors, including demand, labor shortages, the deep south cold snap and container/truck shortages.
When Covid-19 arrived in the United States, it came at the tail end of the Chinese New Year which was extended by their government due to the virus. The United States had thousands of containers in transit which arrived at the time we were going into lockdown. Containers sat for extended periods. As we began to re-open and required replenishment, the containers remained in the US not allowing demand for product to be replenished. In addition, as lockdowns have been eliminated, demand has increased significantly. In fact, container demands carrying the cargo from the transpacific has increased by 40%. This demand has resulted in a shortage of available space and equipment driving cost up more than 400%.
Just as products are imported and exported across the globe, so is labor. Countries like Taiwan import labor from Thailand and Indonesia. Due to the Covid-19, governments have implemented strict guidelines for moving across borders. The US implemented guidelines which also kept team members from being able to work. Both situations have resulted in labor shortages. The labor shortages have resulted in reduced shifts or new employees. Both cases limit production capacity, efficiency and potentially quality.
The freeze which hit our deep south earlier this year resulted in damage to equipment halting production. The biggest impact to RLH was the production of ADN which is a key ingredient in producing Nylon 66. Two key factories which produce this are in Victoria and Orange Texas. ADN Plants are hazardous, highly specialized and costly to build, meaning only a limited number of companies make ADN. In Europe, BASF and Butachemimie produce roughly 40% of the world supply. In the US, Invista (Texas) and Solutia (Alabama) account for 60% of the world supply. Of the 60% produced in the US, close to 70% was shut down due to the winter storm.
Record demands along with the above factors keep logistics and production stressed. We have continued shortages of materials with limited ability to move product of any type. Coupled together, the challenges are high.
If you looked at a manufacturer’s current supply chain and compared it to January 2020, what do you think would be the biggest differences?
We have customers who are manufacturers and suppliers who are manufacturers. As I reflect on this year both up and down the supply chain, I would have to say flexibility and relationships. This may sound like an odd response so I will explain. We have had strong relationships with both suppliers and customers. Making changes to processes and materials in the past would have resulted in months/years of testing. However, we have had to work to find alternative solutions. Because we had developed great relationships in the past, we have been able to support our supply base by presenting options and in turn they have trusted us to work with the customer to receive approvals while they concurrently secured availability of the options. Thanks to sales, engineering, and customer service, we have great relationships with our customers as well. Thanks to our strong engineering team, the customers have come to rely on our product and material knowledge. We have presented options, data to support, and in many cases received waivers to continue producing based on trust in RLH to have found the best solution for their product needs. Results have been quick options for change, quick approvals, communication – more communication, and a lot of trust. All of which are growing our relationships, proving we can all rely on each other, and hit some home runs along the way.
The COVID situation has led many manufacturers to take a hard look at reshoring at least some of their production capabilities. Do you think we’ll see a legitimate surge in U.S.-based manufacturing as a result? Do you see any differences in material availabilities for domestic manufacturers versus manufacturing overseas?
With logistics providers reliability of 30% and cost increase of 400%, this is one of the biggest influences on reshoring. Coupling the increased cost of freight , 25% tariffs, higher labor cost (no imports allowed), and a lack of reliability, the competitive gap due to lower labor costs previously experienced with offshoring have been negated.
The impact of not having the reliability and flexibility in today’s market will change the way manufacturers think about sourcing. Our key customers have already begun requesting continuity plans, looking to source globally and locally for each of their manufacturing sites.
What has RL Hudson done to avoid delays or shut downs due to supply chain shortages?
R. L. Hudson immediately began adjusting our MPS/MRP tools to allow for the additional lead times in transit.
For plastic force majeures, the plastics and production manager jumped to action reviewing available products and how they would compare to the current resins specified for each part. After a plan for each manufacturing location and part was put together, our sales and customer service teams helped us deploy this plan with the customer. Our buyer/planners have been a big help keeping the factory communication flowing, expediting, estimating the cost of air freight while our Account Managers have kept in constant communication with the customers.
For the rubber supply shortages, our supply chain manager has found ways to work with the current factories or identified new options. Again, we rely on our customer service teams to help us deploy the plans with the customer.
By using the data provided by the factories and the most current forecast imports by our supply chain specialist, Our logistics team has spent an enormous time meeting the challenge to find and book space both by sea and air well ahead of the time it will be required while our buyers and planners spends their time working with freight forwarders to find available trucks/drivers to land the product to RLH.
We have a lot of relationships which have been developed over the years. Leaning on lessons learned with many years of experience has helped us be creative.
We also have the best Operations team who help us recover from increased demand inside lead times and the late component deliveries. From Receiving to Assembly and finally Shipping – the team is hands down the best. Early hours, long hours, and hitting the road to make hand deliveries – you name it, we have done it.
Through adversity, we are stronger. Our company president has challenged us – We aim to Be Excellent One Day at a Time.
Supply chain visibility has always been vitally important. What new challenges do you see rising on this front, post-pandemic?
The challenge is always change. Be prepared. Be open. Never stop learning. Uncover/Learn new tools, strengthening old partnerships, build strategic new partnerships, communicate.
Plan! Continuing to stay the course of our Strategic Plan will be KEY. This plan has proven to give us additional flexibility and options for our sales team.
We work hard, play hard, and laugh often
We are passionate about our relationships and partnerships
We take pride In what we do
We make above and beyond seem ordinary