Purchasing Challenges In 2021

Written by Kim R. Dykman, Purchasing/Supplier Development at Apex Spring & Stamping

Dear Customer….

“Due to various market conditions, beyond our control, we regret to inform you…”

As I walk into the office every day, I am confronted with another notice that starts with a similar sentence. Working in purchasing metal, wire, components, packaging and transportation for over 30 years, I have NEVER experienced anything like we have seen this last year. A new challenge or “hole” in the supply chain happens every day, and this is my current reality.

Apex Spring & Stamping Corporation remains committed to delivering excellent parts and assemblies to our customers. We strive to always have a competitive price, but the efforts behind this philosophy have never been more daunting. It may help to share about our ‘behind the scenes’ and a few examples of the manufacturing supply chain is really like today.

The 2020 Affect

At the end of 2020, Apex started to see price increases on most all materials purchased due to COVID. These prices have continued to rise daily. Many suppliers couldn’t keep up with the rising prices, so they not only raised the base prices of materials, they added an additional “surcharge” based on the market the day the product is shipped. We have seen these surcharges range anywhere between 7% to 25%.

The manufacturing quote process in purchasing has also been affected. It is now common that quotes are time-stamped and only good for a period of 24 hours or less. In addition to this, many orders are sent out with one of my favorite acronyms “P. I. E.” (Price in effect). This marks that the company has no idea what the materials value will be on the day they ship. This makes Apex beholden to whatever the market dictates.

Most of the base materials that go into making wire, steel and plastic come from overseas. While we pride ourselves in buying finished materials from mostly domestic suppliers, we have no control where the raw materials come from in this global market. A container shipping from Europe or Japan may have cost $3,000 pre-pandemic, but now that same container can cost up to $20,000!

Force Majeure

“Force Majeure” – this is a noun that many have never heard of or even read until recently. Oxford dictionary defines force majeure as an “unforeseeable circumstance or circumstances that prevent someone or a company from fulfilling a contract” or “irresistible compulsion or greater force”. This clause is now common amongst many of our quotes and orders.

While using this clause does not excuse a company from its payment obligations, it does allow for the terms of a contract to be negated and renegotiated. This can affect delivery dates, quantities, and pricing.

My Confession

Whether I am at my desk working or taking a short break, these hardships do not go away. On top of price increases and the ongoing barriers in the supply chain, the manufacturing industry is experiencing labor shortages across the nation. Trucking and plating companies as well as steel mills, dock and customs firms are very short staffed. So no matter how hard the days may seem, I remember how truly blessed we are at Apex. With a fully staffed team, we are still able to serve our customers with passion and excellence.

Apex stands firm on honesty and integrity. And with that, having the opportunity to simply share some of the mountains we climb daily, gives me motivation and energy to keep moving forward.

We work very tirelessly to battle these global conditions, but it’s the commitment and trusted relationship with our customers and suppliers that have been able to pull us through. Multiple service centers, distributors, and suppliers have proactively purchased common materials well in advance to ensure Apex has materials in the pipeline. Why does this matter? It’s allowed us to continue forward with excellence, providing the best in products and meeting customer delivery schedules.

Our success is your success. And while no amount of loyalty or volume buying can solve the issues we face today, we are confident that we will weather the current economic storm and come out the other side stronger.

How Can We Help?

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