One company’s approach that minimizes impact of global events.
Indisputably, few industries are unscathed by the supply chain crisis triggered by COVID-19. The hardware and building supply industry has been hit particularly hard due to increasing freight costs, shipping delays, labor constraints, and raw material availability. Compounding the issues are China’s rigid rules to curb the pandemic, which, according to Bloomberg, “are about to unleash another wave of summer chaos on supply chains between Asia, the U.S. and Europe.” They recently reported that, “Shipping congestion at Chinese ports, combined with Russia’s war in Ukraine, risks a one-two punch… already buffeted by inflation pressures and headwinds to growth.”
Many business leaders now identify the supply chain issue as the greatest threat to their companies’ growth and their countries’ economies. Throughout the pandemic, which created an unprecedented supply chain bottleneck, our company’s leadership has taken the opportunity to examine our business practices, evaluate what’s working (and what’s not), and further improve our processes.
Flexon has weathered the storm extremely well due in large part to three key strategies that minimized the effects of world events shaping product supplies and costs. Here’s what we’ve learned.
1. Localize the Supply Chain
Shipping backlogs and port congestion have been particularly bad for the U.S. and China but remain a global issue. Since the pandemic lockdown, reports of panic shoppers are occurring more frequently due to general anxiety, natural disasters, or social trends. Moreover, war in Eastern Europe caused crude oil prices to skyrocket, forcing retailers to reconsider where to source and how to keep their store shelves stocked with products. While many retailers publicly announced their commitment to buying more American products, politicians also introduced legislation to invest in American companies.
At Flexon, we have benefited greatly from both our U.S. manufacturing operations. Prior to the pandemic, we began the expansion of our Anderson, South Carolina, manufacturing facility. Recently adding 200,000 square feet and hundreds of new positions, we now have two manufacturing facilities and six distribution centers across the United States. The expansion increases watering hose production by 150% and doubles our wire production. We also source many of our raw materials domestically. While this may not be possible for others to achieve overnight, our industry can and should work toward the goal.
Meeting the demands of our customers and their consumers on time not only ensures continuity but fortifies the relationships we have with them. By sourcing raw materials and moving manufacturing closer to home, you can avoid many of the pitfalls that come with reliance on imported goods and, as we have experienced, you can dramatically improve delivery times.
2. Sustainability is Good for the Planet … and Good for Business
Though consumers have become increasingly environmentally conscious – with recycling and their purchasing habits – most plastic often ends up in landfills and the ocean. The global pandemic exacerbated this environmental concern due to the high demand for disposable masks, gloves, and wipes.
The 2021 United Nations Conference on Trade and Development report addresses global climate change by calling for a transformative approach to climate adaptation with policy that promotes resilient and greener supply chains.
Flexon has always been committed to environmentally sound manufacturing practices and has been at the forefront in using recycled and recyclable materials. Plastic waste such as old shower curtains, pool liners, road cones, or other rejected manufacturing materials are collected to be reprocessed. We incorporate recycled and virgin materials in the watering hose production process, which has numerous positive impacts on the environment. Currently, we recycle more than 50% of materials that would have gone to landfills and our goal is to use over 80% recycled PVC by 2025. In addition, the majority of our in-house packaging is made from recycled paperboard. Moreover, the expansion of our South Carolina facility will enable us to process more scrap and reduce waste.
We encourage others in the industry to use and source recycled materials to help our planet and protect the industry from sourcing issues and the inflationary repercussions.
3. Employee Retention Promotes Customer Retention
Labor challenges factor in as a key contributor to the supply chain crisis. When a business is not well staffed, customer service and retention dwindle. We are living through “The Great Resignation,” where many are choosing to step away from their jobs and careers. According to Industry Week, employers reported higher quit rates compared to past years. They report, “In November 2020, 57% of private workers and 64% of manufacturing workers who left their jobs did so by voluntarily quitting. In November 2021, those numbers jumped to 72% and 70%, respectively.” While these numbers are not as bad as some other industries, such as the hospitality sector, the increase can have a significant impact on the supply chain and customer satisfaction.
At the heart of every organization’s success is the quality of service they provide to their customers. It is important for business leaders to view the day-to-day social and supply chain disruptions brought about by COVID-19 as a key opportunity to build employee morale, which bolsters customer service.
Since its inception, one of Flexon’s core values has been to value its team members. In addition to competitive compensation and equal employment, we believe our employees see growth potential and long-term stability with the company. As a result, several dozen of our employees have been with us for decades. Our average tenure for an employee at Flexon has well exceeded the industry average of 5.1 years. This, in turn, has cultivated strong customer relationships, which span decades.
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Investing in supply chain workarounds can only help protect the hardware and building supply sector. This can entail bringing the supply chain closer to home, diversifying vendors and raw material sources, incorporating sustainable materials into manufacturing processes, and focusing on the people who play a vital role in customer retention.
The supply chain crisis we face is not insurmountable if we expand domestic suppliers, utilize sustainable products, and retain our employees.
We have witnessed firsthand the benefits of employing these principles and know it can help companies in our industry over the long haul. We are in this together and look forward to sharing additional best practices and learning from yours.
Warren Swindlehurst is President of US Wire & Cable Corporation, which consists of three industry-leading divisions in the garden hose, power cord and industrial lighting sectors: Flexon Industries, U.S. Wire & Cable and Voltec Power & Lighting. His email is email@example.com.