February 2nd, 2023
With things slowing down temporarily, door and window executives are finally able to catch their breath and refocus their companies’ plans for steady and sustained growth. In talking to the leaders of various companies, I have found there are three key areas that are being evaluated for possible change.
With the recent supply chain issues that we have seen the past two years, two distinct trends have surfaced. Materials and components that we have taken for granted were suddenly more difficult to get on time and in sufficient quantities. Surging demand has also led to rising material and component costs which tend to stick. For this reason, many fabricators are considering vertical integration. If it can be done in-house as opposed to using an outside vendor, then it may allow a fabricator to have better control over their component availability and cost. For example, some fabricators are considering tempering their own glass as opposed to outsourcing tempered glass. Others are considering making their own insulating glass (IG) versus buying IG from their IG supplier. This way they have better control over their delivery schedules, quality control and cost.
I have also seen corporate mandates with respect to second sourcing. In the past, many fabricators who may have been loyal to a single supplier now have corporate mandates to buy some portion of each component from a secondary source. This is happening not just with door and window fabricators but also with their suppliers. There is testing going on behind the scenes to qualify secondary raw materials that are used to manufacture the components that door and window fabricators rely upon. These substitutions cannot be made on the fly because IG or windows must be fully tested to ensure substitute materials are as good as those which are being replaced.
Despite a slowdown, the industry still needs good people. Early in the pandemic, some companies learned the hard way that, across the board, layoffs are a bad idea. This time around, companies are practicing employee pruning. Fabricators are trying to avoid layoffs of their valuable people. Now, when it comes to layoffs, many of the lower performing employees will be the ones to go. I am seeing companies redirect and cross train their best people to work in other areas of the company, as opposed to asking each department to arbitrarily reduce the head count by x%. This not only keeps the best people on board but also cross trains people in other areas of the company’s fabrication process, thereby making them even more valuable. This practice also keeps your key employees happier, as they are cross trained in other areas of the company’s processes and can therefore improve their prospects of rising to higher levels. It makes people feel more valuable and improves employee retention. Check out How Pruning Can Help Build an Awesome Workplace Culture.
The pandemic also showed the manufacturing and logistics industries the dangers of just-in-time, single-source supply chain management. Many operations will need to rethink lean manufacturing practices. Indeed, many of my customers went from just in time practices to straight up hoarding, which exacerbated shortages further. The panic would intensify when customers simply wanted to know when their materials or components were due to arrive, and their suppliers simply had no idea. There was no way to track whereabouts other than “it’s on a ship or it is stuck at port.” So, moving forward we will see logistics companies begin to leverage Internet of Things (IoT) Technologies. This means imbedding tracing devices into items that connect to the internet to see how many are coming and exactly where they are located at any moment. Also, the use of robots, drones and self-driving vehicles will soon be implemented to unload items and put them on trucks. I was totally appalled one day when one of my window customers complained that his hardware supplier had his order ready to ship, but no one was available at their factory to load the shipment onto a truck! Meanwhile, unfinished windows were piling up at the end of the production line bringing production to a screeching halt and sending workers home early.
Many business leaders have recognized that extended and complex supply chains are vulnerable. As a result, many companies are making plans to shorten supply chains through nearshoring or reshoring and fewer imports.
Mitch Luciano, CEO of the ocean carrier Trailer Bridge, predicts that businesses will be looking to expand their supplier bases across multiple production sites while increasing inventory levels across the system. He believes there will be less of a focus on being the lowest-cost supplier and more about increasing warehousing capacity and dry ports. Luciano predicts that reliability of service will be the key advantage moving forward. Check out his Forbes article “What Will Logistics Look Like After the Pandemic?”
The declining National Association of Home Builders U.S. Market Housing Index may finally be turning around as of January 18, according to an Investing.com report, heading upward for the first time in a year, as mortgage rates dropped slightly. So, use this temporary lull in the action to wisely refocus your company’s direction to help keep growth on that steady yet sustainable curve. Most would agree—that’s the sweet spot!