THE NEW NORMAL?

As businesses everywhere slowly adapt to a new, post pandemic ‘normal’, it’s becoming increasingly evident that a raft of supply chain and cost issues are having an impact on operations according to Paul Harris, Sales & Marketing Director with Tornado Wire and others within the industry.

From the Covid-19 effect to the contentious Brexit trade agreement, it’s clear that this new normal has created a more challenging reality for many companies across many sectors.

Paul took up the story: “I think the areas around supply chain issues fall into a number of categories.

“First there are the interruptions caused by Covid. Tornado was able to quickly introduce safe ways of working into the factory and have pretty much worked throughout setting new production tonnage records month after month.

“Related to that are disruptions in the supply of steel wire. Supply was interrupted at the start of the pandemic and furnaces were shut down. As demand has returned for steel there have been shortages which have led to rising prices.

“The increase in steel prices has not dampened demand even though we are living with longer lead times due to shortages from steel mills and wire drawers. Price Increases tend to result in resellers stocking up in the short term.

“As regards Brexit, we found that a few of our EU-based customers stocked up in the final months of 2020 which was helpful to overcome the log jam of freight and paperwork in January.

“Domestic industry demand has also played its part. For a number of reasons, including weather and lockdowns, there has been a significant increase in the amount of agricultural fencing that has been erected worldwide over the past year. The big question is will that continue and if so for how long?”

“As lead times have increased across the board, this has led to an enforced change of habit with resellers looking to increase stock levels, adding to the already large bubble of orders.

“Tornado is working with our reseller and contractor customers to make sure that we keep themsupplied and believe that, in the short-term, increased co-operation is the best way to keep the industry moving “ added Paul.

There are many other businesses across the fencing, timber and landscaping sectors that are noticing similar issues with supply and costs.

Nick Palmer of EPS Services commented: “We have seen price increases ranging from 3% to 20% since January this year from a range of suppliers across Europe, both for finished goods and raw materials.

“Initially we saw a Brexit effect, with shipping delays and a subsequent increase costs in Q1, both to imported goods and our exported products. This has settled down in the second quarter but we appear to now be seeing strong global demand for commodities pushing up prices.

“In addition there appears to be ongoing weak supply issues as manufacturers adjust to how goods are being produced and supplied in the post COVID world.

“Improving exchange rates between Sterling and the Euro since the New Year have helped mitigate some of the costs but only partially. We are being forced to consider our price position in the marketplace,” added Nick.

Jon Holt, owner of Nottingham-based Barnard Fencing, has seen business boom over the past year or so but is well aware of the issues facing firms across the sector.

Jon explained “Last year was, fortunately, a boom year for us and the business is now at another level, which is great. Stock levels have been the hardest problem to overcome, in particular, restocking due to the whole process of buying wholesale becoming very volatile.

“Stock prices are moving up and changing quite frequently within the landscaping market, which was to be expected with restrictions loosening and tightening. We do have good relationships with suppliers though and they did do us proud last year so that really paid off.

“The strategy we’ve had to take with them is that whenever anything is available you have to buy it in big volume/bulk to keep customers happy for a prolonged period of time. When delivering the stock we found that even though there were restrictions, good inwards deliveries were still accepted and, after a month or so, we found that they were classed as an essential business,” he added.

With most economic commentators predicting steadily rising inflation for the foreseeable future, it’s clear that the new normal includes a number of strategic challenges for businesses. How each responds to and plans for the uncertainties ahead will be critical.

Co-operation across supply chains and good communication with customers, as ever, will be key to deciding who does and who doesn’t make it through these choppy waters.