Many Supply Line Challenges Stem From Labor

Oct 8, 2021  | 6 min  | Ep4708

Supply chains disruptions have become a new normal for manufacturers, retailers and consumers.

Those managing the supplies are left to juggle daily and hourly changes in what’s available or has arrived for assembly.

Industrial and agricultural manufacturer Vermeer Corporation is based in Pella, Iowa and has dealt with those same supply problems.

I sat down with CEO Jason Andgringa this week to hear about what hurdles they’ve had to clear.

Jason Andringa, CEO, Vermeer: This sort of COVID leading into the supply chain challenge is something that's unprecedented in the last quarterly meeting that we had for our team members at Vermeer. You know, I said, we can't even look back and say, it's not been this bad in 10 years, or 20 years, it's never been this bad. So you know, we've been around for 73 years. And the supply chain challenges have never been this challenging. And you know, our suppliers are doing the best they can, we're having very transparent, straightforward conversations with them, it's just a matter of COVID caused companies to pull back. And instead of demand for goods tapering back, it actually accelerated. And we've been playing catch up ever since. And very much driven by workforce shortages. And the other thing, which is kind of hard to get your mind around is, you may have the you may have 95% of the components to build a machine. But it's not done till you have 100%. And so you you have a you have 95% of what you need, and you're waiting on that 5% and that 5% keeps changing. It's not consistent. What is that final 5% that you need to finish a machine? And those are the challenges that our supply chain team are working on, literally not daily, but hourly, trying to make sure that we're getting the components in that we need.

Paul Yeager: That 5% is there any you talk about it shifting and evolving? Is there ever a part where you've said, Well, why can't we just do that 5% because is Vermeer one of those companies that you didn't make everything here, you would bring in some supplies, like a lot of the bigger ones have done that now, they don't make everything in house that they used to. So if you had a discussion where you've said, Well, maybe we're going to have to start doing some of these things ourselves.

Jason Andringa, CEO, Vermeer: We have had some of those discussions, it's interesting with regards to doing work with sheets of steel, we're actually quite vertically integrated as it is we do a lot of our own bending machining, turning welding, a lot of the operations that have to do with the steel that makes up our equipment, and is ironic, even though the price of steel has gone up like crazy, we have really not had significant challenges with regards to steel. But when we think of some of the other components, it's not as easy as just thinking that we're going to make them because our suppliers have supply chain constraints. So if we decided that, you know, we were going to do what this supplier is doing, suddenly, we would have the supply chain challenges that they already have.

Paul Yeager: What's been the biggest frustration in all of this?

Jason Andringa, CEO, Vermeer: You have huge demand, you have the facilities to do it, you've got the team to do it. And you just can't get in all the components you need to build the full machines. If we instantly had all the supply that we need, then we would instantly need to hire a lot more people. And you know, we're really tailoring the rate at which we hire people based on trying to make sure we can keep work in front of those team members. So that's the biggest challenge is just knowing that customers are going to wait months to get their hands on a piece of Vermeer equipment that they need. And we desperately want to build it faster and we just can't. 

Paul Yeager: I heard you give an interview recently, where you said we normally stock our equipment in a certain spot kind of is like a launching point? 

Jason Andringa, CEO, Vermeer: No. And, and that has been another challenge. You know, so far, there has been you know, a couple hurricanes that have hit the United States and caused damage, and it's not easy to kind of build up a stock that can be immediately deployed after a hurricane, but we we like to try and you know, this year that has been more challenging than ever before. And so a hurricane strikes our dealer will inform us of how much equipment they think that they will need to to help and support and you know, get into the hands of their customers to do this work. And and we can't supply to them and they can't supply to their customers. 

Paul Yeager: Give me two products that have been a challenge for you maybe before and after, you know, as you talk about the evolving 5%.

Jason Andringa, CEO, Vermeer: Yeah, and it once again, it keeps changing. So at times, it feels like you know maybe hydraulic componentry is our number one issue at times, it feels like wiring harnesses are number one issue engines, components that go into track systems, hoses for radiators and other hydraulic componentry. So it honestly it just keeps changing. But at the same time, you know, once again, you know, I feel as though our suppliers are, you know, doing the best that they can to, you know, get the workforce they need to try to plan for it to try to accommodate us. We have very constructive and transparent and straightforward conversations. It's just when the pandemic broke, everybody kind of pulled back and we've we've been playing catch up ever since. And for a while it felt like we were not too far away from starting to eat into our backlog. And now the past few months, it's gone, you know the wrong direction again, where our ability to build to meet demand just keeps falling farther behind. And we're not alone in that, you know, we we know from other manufacturers in Iowa and around the country. We're all in the same boat. It's all over the news. But, yeah, it's just it's just frustrating when you know, customers are desperate to get their hands on a new piece of equipment. And they've got months of backlog.

The full interview will be available Tuesday through our YouTube and MtoM podcast feed.

Contact: Paul.Yeager@iowapbs.org

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