by Patti Dees
HVAC supply chain issues continue as global and local events slow manufacturing, and the logistics industry recovers from the pandemic and labor challenges. The commercial HVAC industry and those who rely on it benefit from understanding current issues in the supply chain and how HVAC businesses can prepare for delays and shortages.
Global Supply Chain Issues
The global supply chain is an extensive network of shipping, air, and trucking routes for materials and goods, as well as storage at points in between. Every nation relies on this network for its economy. The scope of the logistics industry is massive. Yet, until the pandemic, many consumers failed to recognize its pervasive nature and just how devastating interruptions can be. Anticipating HVAC supply chain issues begins with understanding how world events can impact the manufacture and movement of goods.
Danger
War and political instability heighten the danger of moving goods, even for those not directly involved in the conflict. Additionally, geopolitical tensions make countries less willing to cooperate, creating unreliable supplies of materials, goods, and parts. Resources required for manufacturing and processing become more difficult or even impossible to reach when violence disrupts activities such as mining and farming.
For example, the war in Ukraine is most notable for its impact on shipping routes. However, with air space being restricted as well, air freight has faced increased costs and rerouting. Even though the US is not at war with China and Iran, the tensions with these countries have led not only to tariffs and parts shortages but in some cases to government-sanctioned piracy.
Labor
People are the driving force behind getting goods and materials where they need to go. Layoffs, staff shortages, labor disputes – gaps created by any one of these can slow or stop the supply chain from functioning.
Layoffs in any one segment, such as manufacturing or transportation, can create delays. Even if demand picks up enough to warrant rehiring personnel, it takes time to ramp back up to pre-layoff throughput. As supplies become unreliable, those working in transportation face an increasingly unpredictable and stressful work environment. The current shortage of truckers stems in part from individuals looking for more reliable work.
Labor disputes between unions and corporations can also create bottlenecks. Without reaching an agreement, both sides of the dispute may contribute to slowing business processes or creating disruptive work environments. When the labor dispute in question involves transportation, the supply chain for thousands of products and materials becomes very fragile.
Impact on HVAC
For HVAC, commercial supply chain issues have created delays in receiving parts and equipment. Coupled with extremely high temperatures across the US, HVAC contractors can easily find themselves struggling to meet customer needs.
Reported shortages of copper, steel, aluminum, and plastic have delayed manufacturers. However, other resources have also been hard hit. Ukraine has been a major supplier of neon, used in manufacturing computer chips. With war impeding supplies from the country, computer chips used in heat pumps and other equipment have long delays. These delays can push the availability of HVAC products out several months.
Preparing for Delays
While most of the supply chain issues are out of technicians’ and business owners’ hands, there are a few strategies that can help.
- Double down on promoting preventive maintenance practices like changing filters and insulating ductwork. Keeping equipment in the best working condition possible reduces the need for repairs.
- Identify which situations allow the use of used parts and where to purchase them. While units covered by warranties may require specific branded or certified new parts, for other repairs, used parts may help alleviate some of the crunch felt from parts shortages.
- Use multiple distributors. Some companies have been better prepared than others and may have inventory when others do not.
- If storage facilities allow, stock up on commonly needed inventory. “Just in time” inventory management, where items are ordered as they are needed, only functions well when there are no supply chain issues.
- Calling around, establishing business relationships, and a willingness to redesign new installations based on equipment availability are additional strategies.
- In all cases, communication is key. Be honest with customers about delays and the reasons for them. Discuss inventory with distributors and manufacturers frequently to identify upcoming changes.
Developing or redesigning business approaches that emphasize planning and adaptability can help businesses weather the current HVAC supply chain issues. Understanding how the supply chain functions, and specifically how commercial HVAC can be impacted, is the first step in creating resiliency. Speak with Therma representatives to discuss additional strategies or unique challenges.
Patti draws on her background as a chemical engineer to share information with readers on technology, manufacturing, and construction.
Sources and Further Reading
CNN Business – Why the global supply chain mess is getting so much worse | CNN Business
Forbes – Supply Chains Face New Problems
HVAC Informed – Supply Chain Challenges Persist As Demand For HVAC Grows
Men’s Journal – A Shortage of A/C Parts Hits During Summer Repair Season – Men’s Journal
Shipwell – The top 5 issues anticipated to impact supply chains in 2023 – Shipwell
WHP CBS 21 – From supply chain to staffing, HVAC industry changing business model to keep up
World Economic Forum – 5 challenges facing global supply chains | World Economic Forum
