prices dropped again in November and December, his company purchased long on lumber to get it through the first half of the year. As prices get higher, it relies on a kanban (just-in-time) ordering system to order what it needs and to maintain a lean inventory.
While some companies have deep enough pockets to make long lumber buys, many smaller companies haven’t been so fortunate. While lumber prices have skyrocketed, their lines of credit have remained static.
Quote: “Some of you are very lucky to have lines of credit where you can buy lumber, three months, six months or a year out. There is a good portion of our customers who don't have that luxury. And so they're all hitting their credit limits and so they're struggling, adapting to the price increases because now their load is double what it used to cost and so obviously the wholesaler or the mills are not doubling their credit. So, they're having trouble averaging out their costs so they can continue to survive.”
Long lead times have been a factor. One participant has mill orders from last November that have not yet shipped. And when lumber is urgently needed, some companies are paying significant premiums to trucking companies for expedited delivery of urgently needed material.
One Master Learning Group member reported a large bump in GMA pallet sales last year when rental companies were having trouble supplying. This could result in a good infusion of new pallets for the used pallet pool, however, he and others also noted that some of the new pallet orders were for particularly lightweight pallets that will not survive many trips.
Nails and Fasteners
One company reported purchasing double or triple of what it normally would, up to a year’s worth of material at a time. Not only are delivery lead times extremely lengthy, but they are concerned about future anti-dumping fees and other potential issues. Another company with a strong relationship with its nail vendor has had no issue with availability.
Quote: “I know that's not going to go away. There's going to continue to strain when it comes to nails and fasteners. Just communicating with your vendors and suppliers, I think it's super-critical.”
Machinery and Machine Parts
There is a lot of wear and tear on pallet machinery, so parts replacement is a fact of life. One participant singled out praise for parts service offered by a machinery manufacturer. Others cautioned that new machinery lead times can be lengthy, so plan well in advance.
Supply Chain Disruptions Cont'd from Page 21
22 WESTERN PALLET