How A Single Missing Part Can Hold Up $5 Million Machines And Unleash Industrial Hell
Nicole Wolter runs a factory in Wauconda, Ill., that makes gears and pulleys used in a variety of industrial equipment. She has plenty of orders, but she's straining to get all the parts she needs – and that's creating trouble across the supply chain.
"I'm getting phone calls of 'Hey, you're holding up a $5 million machine,'" says Wolter, adding that customers sometimes offer to pay for overtime in her factory or next-day air delivery. "I think there's just that air of desperation."
Unfortunately, there's little Wolter, who runs HM Manufacturing, can do. Her own suppliers are short-staffed and struggling to keep up with demand.
"I had an order for a plater that was sitting on their dock for six weeks and they hadn't touched it because they couldn't get the workforce," Wolter says. "So that hurt."
Anyone who's ever tried to cook an elaborate dish only to be foiled by a missing ingredient can appreciate what manufacturers are wrestling with a year and a half into the pandemic. Many are stuck waiting for crucial parts that are out of stock or stuck in transit.
"You've got 99 of the 100 parts you need, and you have work-in-process that's stuck," says Tim Fiore, who conducts a monthly survey of factory managers for the Institute for Supply Management.
Rows and rows of unfinished goods are piling up
The survey shows factory inventories, badly depleted during the pandemic, grew slightly last month. But Fiore cautions some of that growth represents products that can't be sold until missing parts are located.
Acres of unfinished cars, parked and waiting for semiconductors are just the most visible example of widespread shortages that are weighing on the economic recovery.
Auto sales fell last month because the chip shortage left car dealers with few vehicles to sell. Plastic products and even cardboard are also in short supply.
Production at the Vermeer company in Pella, Iowa, has been limited by a shortage of wiring harnesses and hydraulic components. That's a challenge for the company, which makes tree-stump cutters and other equipment in heavy demand after Hurricane Ida.
"We take pride in the fact that our equipment is used to help clean up after a natural disaster," says CEO Jason Andringa. "We try to maintain inventory during kind of the normal hurricane season. But we can't do that at all right now."
The 73-year-old company, which Andringa's grandfather started, is on track to add about 300 workers this year. But Vermeer could have added twice that many if there were more parts for employees to work with.
"My grandfather never dealt with supply-chain challenges this troublesome," says Andringa. "If I could snap my fingers and as of tomorrow we would get all the supply we need when we need it, then immediately hiring more team members would be our top need to continue to ramp up to meet demand."
Congested shipping lines are also creating havoc
Finding parts is one challenge. Actually getting them to the factory is another. Record volumes of freight are overloading the transportation system, leaving key supplies stuck on trucks, trains and cargo ships.
At the busy Port of Los Angeles, container ships are now waiting more than a week to unload.
Gene Seroka, the port's executive director, acknowledged that when a container filled with critical parts is delayed, there's a multiplier effect, holding up deliveries of other products throughout the supply chain.
"We're working as if it's a triage situation," Seroka says. "We're asking these companies to give us a list of their containers in priority fashion. We're working directly with the terminal operator and shipping lines to rush that product through and get it out to those manufacturing facilities."
There's little sign that supply shortages and delivery delays will ease any time soon. So for now, factories are improvising.
Wolter has tried to find or manufacture alternatives for missing parts. She's added to her own workforce and purchased her first robot.
Still, products she used to deliver in five weeks now routinely take nearly twice that long. Her competitors are just as slow or slower, though. And the orders keep coming in.
"It's a circus," Wolter says with a rueful laugh. "And I'd like to get off this ride."