Rethinking inventory practices as parts shortages continue

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Over the past 18 months, supply chain shortages have rocked the construction industry as contractors and dealers scramble for parts, accessories and machinery. One company that is seeing business explode in all of this is parts and equipment broker Lighthouse Machinery.

We caught up with Brad Pruitt, Parts Sales Manager at Lighthouse Machinery at the AEMP Connect 2022 conference in March. In a subsequent interview, Pruitt shared with us his understanding of the issue and what contractors and dealers need to know to manage their shortages and help prevent downtime from future supply chain issues.

Sam Light started Lighthouse Machinery about three years ago, focusing primarily on equipment. But just before the supply chain crisis hit, he realized there was a huge need for parts to back up the equipment. “We’ve gone from one guy working in the pole barn to six people now, and we just bought a building to store inventory,” Pruitt says.

Everyone surprised

“I would love to sit here and say we saw this coming, but we didn’t,” Pruitt said. The first clues arrived in 2020. “It started suddenly. We had trouble getting filters and ground engagement tools. High-volume items that we never had trouble getting before suddenly found themselves in short supply. »

To meet demand, the company sources parts from around the world, including Asia, Spain and South Africa. “We currently have 14 containers on order, four of which are expected to arrive shortly with ground attack tools from China,” Pruitt says. “We’ve already pre-sold the majority of this to dealers and large customers who are ready to buy one truck at a time.”

Rethink inventory

Not so long ago, dealerships, OEMs, and even contractors operated on the principle of just-in-time inventory. The idea was to avoid tying up your money in inventory, because a streamlined, digitally connected global supply chain could get you almost anything in 24 hours or less. The pandemic, shipping container shortages, problems at ports, trucker strikes and unforeseen demand have shattered this idea.

“It changed the way we approached our customers,” says Pruitt. “We encourage them to buy for the future because we don’t know what the future holds. They have to buy it when they can get it and plan a lot further into the future than they have. done in the past. We really can’t do things the old way anymore.

GET a dire situation

And while there are shortages of all types of spares and repairs, the biggest shortfall, Pruitt says, is in ground-engaging tools, especially those used in the mining industry. “They’re almost impossible to find,” Pruitt says. “We spend all day, every day, looking for them, selling what we can find and looking for more. We have a bunch of them on order, but they’re not here yet. I’m still four or five weeks.

The lesson, says Pruitt, is to look at the parts you use and use repeatedly – cutting edges, bucket teeth, etc. – and determine what your burn rate is for a year. Then find a way to secure them. “It can take six months to get them to you,” he says.

DEF Pumps

Precision parts such as injectors and turbos are also rare. “Diesel exhaust fluid pumps are non-existent,” says Pruitt. “You can’t find them and there’s no secondary market. It’s a patented product, and you can’t ask someone to make you one.

Turbochargers are another issue, Pruitt says. “There are electronics on the new turbos that you just can’t get.”

In the past, most supply chain disruptions were isolated, such as when the tsunami and the collapse of the Fukushima nuclear power plant hit Japan in 2011. Other regions could step in to quickly fill the void. But with the current convergence of problems, the whole world is grappling with problems.

There’s no silver bullet on the horizon, Pruitt says. “I think we’re still going to have problems for another year or two at least because I just don’t see us bouncing back that fast.”

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