3 Tactics to Avoid Supply Chain Delays in 2022

Let's get something straight upfront: This year's supply chain problems will not end at the stroke of midnight on New Year's Eve. Unfortunately, the same challenges will persist long into 2022 and potentially beyond. Like it or not, the world has changed — and the only thing we can control is how we respond to it.

As the old saying goes, if you always do what you've always done, you'll always get what you always got. While the material shortages of 2021 have been rough on the industrial, construction, and manufacturing sectors, we've learned a lot. The good news is that we can now be proactive and apply the lessons we learned to act strategically and regain control of our critical supply chains.

Here are three tactics I'm recommending to my customers to keep them in materials, working, and profitable going into the new year.

Identify and Spec Functional Equivalents

One of the best ways to immediately build resiliency into your supply chains is to open up your specifications. To be clear, I'm a fan of and advocate for concise, well-written specs for quality materials. My company, Troop Industrial, specializes in supplying the highest grade materials to engineering, procurement, and construction (EPC) clientele from major oil & gas companies, refineries, and industrial contractors worldwide. But your spec doesn't have to be overly narrow to get the best materials into the job. In fact, opening up the specs to functionally equivalent materials from reputable providers can open additional supply chain channels, relieve bottlenecks, and make a positive impact on the schedule.

In most cases, multiple suppliers and manufacturers can be specified for a given material with zero impact on overall quality. If you're not sure, check with your material suppliers. They should be able to give you additional options.

Get Owners, Engineering, Procurement, and Suppliers onto the Same Page

In the current environment, it's vital that engineers are plugged into the realities of the supply chain. People who have been around the business for a long time (both engineers and procurement professionals) might chuckle at this idea, as there is a longstanding disconnect between design and construction. That said, there are major benefits to bridging that divide.

Engineers determine what materials need to go into a job, primarily based on what those materials have to do. How much pressure, shear, tension, and/or heat they must withstand to do the job without failing. In the case of stud bolts, gaskets, and construction fasteners, for example, they then pick specific materials based on those requirements. It's in this second step that things have gotten increasingly complicated over the past year.

In the pre-2020 supply chain, engineers could pick from a wide menu of different options that would meet their design requirements. For example, bolts of a given size/rating could be color-coded based on grade of material. There are some benefits to color-coding bolts, but in our current reality, the negatives outweigh the positives.

Overspecification based on aesthetics and other nonessential factors can complicate the supply chain and cause delays, so stick to the basics. Organizations such as ASTM International, the American Society of Mechanical Engineers (ASME), and other governing bodies publish global standards detailing how bolts, gaskets, and other materials are to be identified. Once an additional process is required by engineering, it creates additional costs and drastically reduces availability. And in today's market, those additions can easily create unusually long delays and negatively impact man hours and the job schedule.

The best way to address this challenge is to open up a dialogue between the engineering and procurement operations within your supply chain. Everyone involved in the project should work to create and maintain open communication channels as well as utilize tools, trackers, or other methods to rapidly identify critical pitfalls that work against project efficiency before they affect the schedule.

Proactively Identify Material Pitfalls

Virtually everyone I know has been hit with a material delay of one form or another this year. A long list of contributing factors — including raw material shortages, COVID-19 shutdowns, typhoons, and shipping disasters — have combined to wreak havoc on shipping times. As most material delivery times have moved back, the only rational response is to move planning times forward just as much.

What does that look like?

Partner with a Professional

An experienced material supplier should be able to discuss your bill of material and advise what line items are experiencing supply shortages. They should also be able to identify and discuss specifications that will negatively affect the job. Some engineered specifications are unnecessary. They may look good on paper, but some create unusual strains on procurement and the supply chain — and anything that creates additional burdens should be avoided.

Identify Long Lead Time Material

Special orders and long lead time items should be identified at the outset. Your bills of material will be a combination of typical commodity items that are on the shelf and special order items that typically have a longer lead time. Get those special order items identified and ordered as early as possible. Do not rely on your previous experience with those items and expect them to arrive on the job like they did last year. By waiting, you risk having workers waiting on materials and paying people to look busy.

Acknowledge that Commodities Are No Longer a Commodity

The materials you would typically order today and receive the same or next day are going to start taking several days, if not weeks, to arrive. Historically, vessels, towers, and large engineered items were ordered way in advance of the job. The bolts, gaskets, small bore fittings, and fasteners were ordered later because they were delivered a few days after ordering. Not anymore. Get those commodity items ordered as soon as possible. These smaller items can make a huge impact on the profitability and success of a job, especially if there is significant downtime from workers waiting around on material.

Stay One Step Ahead with Min/Max, Consignment, and Installation Work Packages (IWPs)

It's time to get creative. Min/Max trailers and consignments have been around for a long time, and IWPs are becoming more popular. Having materials waiting on you instead of you waiting on materials is a fantastic way to stay ahead of the current supply chain debacle.

Now, more than ever, it is important to work outside the box. At Troop Industrial we carved out the Projexx Group, which manages everything listed above. We can consign, provide min/max, and execute IWPs. We have state-of-the-art software that has been custom designed to help us manage all these unique arrangements efficiently. The cost savings in reduced manpower and the positive impact on the job schedule are dramatic!

Adapt Your Supply Chain to Survive and Thrive in 2022 and Beyond

While we are met with new challenges, there are also new opportunities to take control of our supply chains and put our projects in better position to succeed.

As we move toward 2022, watch out for the quicksand of stress and anxiety. It can drive you crazy, and it won't do anything to help you succeed. The best way to avoid quicksand is to take the next step forward, and in many cases you can accomplish that with a simple message or phone call.

If you're stressing about critical materials for your next project (or haven't started thinking about it yet), reach out to me through LinkedIn or leave a message below. I would be happy to learn more about your project and talk through your issues and some solutions.

Now let's get to work, make things happen, and make a difference.