HVAC and refrigeration distributor ACR Supply Co.'s customer base is primarily in the Southeast, where demand for reliable climate control can rise faster than the soaring mercury. So as winter melts into spring and summer looms on the horizon, the last thing the company needs is a shipment delay.
But when the West Coast port slowdown affected the company's air conditioning equipment, ACR's supply chain director, Mark Bray, had to plan accordingly to make sure the company's inventory didn't dwindle with its busy season approaching.
“We said, ‘OK, let’s stock up; we’ve got to buy a little bit more than maybe what we normally would buy to prepare for that,’” Bray says in Preparing for the Worst. “Hopefully they won’t be out, but if they are, if we plan ahead and buy up some inventory now, we’ll be the ones who have it in stock and maybe our competition won’t have it.”
Disruptions such as natural disasters, port slowdowns and manufacturer recalls are pain points for any distributor with a global supply chain. And while no one can predict the next labor dispute, earthquake or defective product, companies can mitigate risk by preparing for the best ways to deal with unexpected threats.
An interrupted supply chain can lead to increased overhead, added shipping expense, overtime pay, inefficient distribution centers and a loss of customers who instead look for a distributor that can deliver, says Paul Dittmann, executive director of the Global Supply Chain Institute at the University of Tennessee-Knoxville.
“A company’s overall financial health, their shareholder value, is highly dependent on an efficient supply chain,” Dittmann says.
Read more about mitigating risk, including best practices from distributors and consultants, in Preparing for the Worst.