Back in March of 2020, the notion of supply chain challenges associated with foodservice equipment and supplies seemed highly unlikely. Manufacturers’ capacity to produce such items was greater than operators’ ability to consume them. Then the pandemic hit and turned everything upside down. What once took weeks to produce now took months seemingly in the blink of an eye.
“In fairness to all involved, the magnitude of all of this took everyone by surprise,” says Lenny Condenzio, FCSI, CEO of Ricca Design, a Denver-based foodservice design firm.
So where does the industry stand today?
The good news is that the supply chain has improved but its performance is nowhere near where it was prior to the pandemic. “Lead times have stabilized and expectations have changed about availability,” says Eric Ellingson, executive vice president for Bargreen-Ellingson, a Tacoma, Wash.-based foodservice equipment and supplies dealer. “You don’t have instant access to a lot of equipment, but you do have access to it in six to eight weeks. It’s leveled out and it’s not as lumpy. Everything has standardized into two or three times longer than it used to be. We do have a few exceptions where a product might take considerably longer but those are fewer and farther between.”
If the early phase of this supply chain crisis was one of shock and awe, this present is marked by collaboration and flexibility. “I have been impressed with some of the stories I hear about Ricca projects and others about how members of the industry who traditionally don’t work well together are now doing just that,” Condenzio says. “There has been more of a genuine effort to not undercut anyone as we worked more closely together to find the right solution. The communication was open and honest. If a dealer or manufacturer knew they could not get something in six weeks but kept saying next week, it frustrated everyone. When they were up front and said the item would not be there for eight weeks, people may have been frustrated but they understood. Communication was really important. Now what I see is proactivity.”
Indeed, clear, concise and timely communication is more important than ever before. “The reality is now we have more visibility into what accurate lead times are. At the beginning there was so much unpredictability about lead times. Most of us can work with longer lead times provided we have accurate lead times. And most factories now have a better idea as to how long it will take them to produce something and that was not the case before,” Ellingson says.
To deal with longer lead times, dealers had to make a few adjustments, which includes broadening their list of suppliers. “As a stocking dealer, our purchasing department never had to worry about supply chain. If we ran out it was because a customer bought too much not because we could not get product,” Ellingson says. “We had to get more intentional about forecasting what we would need. We had to turn our buyers into purchasers and forecasters and give them more tools.”
But the challenges of sourcing product gave way to new issues dealers had to address. “Our sales team started to put in orders well in advance of when they would need it. We had to sift through our sales to see which orders really were a priority. And then we had to look at other sources,” Ellingson says. “Forks were a big thing at the beginning of the pandemic. It was crazy to run out of forks. We polled our sales staff about places to find forks and they helped us find nontraditional suppliers. Then these forks filled up our warehouses and basically, we had way too many products from non-traditional suppliers in the warehouse. It’s been a constant and massive tug on resources the past few years.”
While dealers got creative in sourcing, foodservice designers had to do the same when managing their projects. “In one example, we are designing around the equipment that’s available because there’s a donor involved in the project and they want it installed by a certain date,” Condenzio says. “We did an ideal design and then did a search about what’s available. We even thought about not including a walk-in because at the time it was an 8-month lead time. So maybe we consider a battery of reach-ins instead. We were, however, able to work through that by working with the manufacturers. You have to see what’s available and match it as closely as possible to what the client wants in the end. This was all unheard of 20 months ago. Nobody wanted to collaborate like this at that time. That’s no longer the case. We’ve had to remind our team we need to work together to get the result we want.”
Navigating the Shifting Currents
Indeed, patience and understanding go a long way to navigating the shifting currents in today’s foodservice equipment and supplies supply chain. “We have found our operators have been more patient than we would have expected. They might be somewhat numb to the reality,” Ellingson says. “Labor challenges impact manufacturing, distributors, truck drivers and even service agents. Repair costs and time to repair something has gone up, too. Operators have found they have no choice but to wait for us to source the right piece of equipment. It has caused us to make sure we source as expediently as possible. They’ve given us more leeway but it’s the best option. For the next 12 months we are going to live with this.”
Supply chain issues also impact service agents’ ability to repair equipment and execute planned maintenance programs. “We have seen an uptick in back-order parts over the last quarter or so,” says Nick Cribb, president of SAM Service, an Albany, Ga.-based service agent. “It was getting better for a while, but it seemed to deteriorate a little bit lately. Our busiest season on the service side is always the second and third quarters. When it’s hot outside and people are outside enjoying themselves, things break, and we need to repair it. And then school starts, and we need to repair items there too. So, I am sure we depleted some of the parts stock at that time.”
In addition, while many service agents prefer to use OEM (original equipment manufacturer) parts, the supply chain challenges are forcing them to make tough decisions. “Necessity is oftentimes the biggest pusher in any industry,” Cribb says. “When I can’t give an operator a date as to when the OEM part will be here, but I can provide the generic part the answer is usually let’s give it a try.”
But these challenges go beyond standard maintenance and repair issues. “It’s kind of a twofold way that our leadership team views it,” Cribb says. “We have to have the new equipment in to be able to install the equipment for our end-user customers. I would say this is a little better than it was at its worst.”
As a result of the longer lead times for equipment, Cribb notes some of his customers are hanging on to equipment longer than they might have in the past. “We are seeing a lot more repairs being done even when it’s obvious to replace it,” he says. “They can’t be down 17 or 18 weeks so the operators’ message to us is usually just fix it. They understand it’s not the best decision, but they have no other choice. The other option is to order new and wait for months and months. They can’t do it. And they know it’s not because they are not getting good service or advice. They just can’t wait that long.”
Service agents continue to deal with rising prices in the form of fuel, labor and more. “We have to over-communicate our decisions to raise rates or add fuel surcharges. We also have to offer outside-of-the-box approaches,” Cribb says. “Everyone knows all of these challenges, but we can’t simply raise our rates. We have to call our valued partners and explain why we are doing something.”