Longer than normal lead times are starting to create problems for panel shops and other system integrators. We reached out to several of our larger distributors to get their take on the situation. Here was their feedback:
- Longer than normal lead times aren’t limited to specific manufacturers or specific verticals. We are seeing longer lead times from almost every vendor. Nearly all of our manufacturers are battling supply chain logistical issues.
- Sometimes the issue is parts for the machine that makes the components have been delayed; sometimes it’s the raw material can’t be delivered or is being delayed in transit; sometimes it’s the factory was shut down or operated on reduced staff due to Covid and now they are back up and running but not enough workers will come back to work so production is reduced.
- Another large factor is that so much more product is being shipped via boat vs air. With fewer commercial flights in the air, the cost of air freight has gone through the roof. A significant portion of air shipments tend to ride on commercial flights.
- When the pandemic broke and the future was uncertain a lot of manufacturers backed off orders of components, and in turn their suppliers reduced production. Now that things are kicking back up into high gear we are feeling the ripple effect and it is painful.
“I think this funky supply chain is going to be with us for the rest of the year at the very least.” summarized one component distribution manager. Long lead times on standard items have an effect even when alternatives can be sourced. Investigating alternative components takes time and can create delays as a cross has to be verified by the customer as acceptable. This requires more project administration and contributes to delivery delays.
Another consequence to consider is that as items get scarce it is also resulting in price increases. Manufacturers that kept prices in check last year aren’t feeling so generous now. Plus the shipping expenses mentioned above are cutting into margins and requiring everyone in the supply chain to try to recoup those costs.
So, bottom line, what can we all do to help mitigate this issue? Factor longer lead times into project plans, order early, and keep AEC up to date on the timeline you are working with. As one distribution VP said, “As the economy comes back and demand increases, I fear this will only get worse.” AEC Engineering will work creatively with you to do what we can to help.
