Responding to market uncertainty
Almost all of us have experienced higher prices, shortages, and shipping delays in the last 2 years. Whether it’s related to world markets, pandemics, political conflict, or canal blockages, every sector of the economy has been affected.
It is uncertain how soon we can return to an expectation that pricing will be held for any length of time. It’s become the standard to see PIE (Pricing in effect) pricing until the ink is dry on this quote, or until the phone call is ended!
Recently we ran short of some stainless tubes and could find no other supply line that could satisfy the short-term need. However, we did find some sanitary tubes (higher grade and finish) that were available. Even though the grade was higher, and the price was not unreasonable, we made the substitution to achieve a deadline and satisfy a customer.
Below link is our stainless steel replacements for Agriculture parts.
Another solution we’ve employed is to anticipate stocking needs and build greater margins into our supply times. Instead of expecting a shipment in 4 months, allow 6 months. Consider breaking a large restocking order up to multiple suppliers. If there are container, port, blocked canal, or trucking delays, material may still arrive by another path.
More and more we need to understand how to move our businesses forward with this volatility that could be with us for some time. In the case of shortages, perhaps an upgraded, or alternate material could be an option.
We may need to cultivate other relationships. Instead of getting just 3 prices, research the market. Are there more options? Perhaps off-shore, or even better – local?
The wisdom quote I’ve often used is more applicable now than ever before.
“There’s no substitute for thinking ahead!”Warren Peters