As an owner or manager of a large multifamily property, you have been hit especially hard by the supply chain interruptions we have all seen in the news. Images of cargo ships backlogged in the waters off the West Coast, waiting to clear their goods, are only a small part of a larger problem. Shortages of construction materials and appliances and the need to improve HVAC systems are two major supply chain-related problems that have affected large multi-family property owners and managers during the COVID-19 pandemic. Proactive supply chain risk management, including new technology and approaches, offers a solution to this and future interruptions.
Supply chain issues continue to impact the property sector
As a large multifamily property owner, you were dealt a big blow during the onset of the pandemic. Like everyone else, shortages in PPE caused many headaches. Masks, gloves and hand sanitizers were hard to come by, which left many companies scrambling to place and receive orders. After these supplies normalized and were more readily available, other supplies became scarce.
HVAC, which is critical to your multifamily operations, came under scrutiny during COVID-19. Airflow, filtration and ventilation turned out to be big factors to mitigate the spread of infectious diseases. This sent building owners into a frenzy to try and source quality filters like the MERV 13.
The lumber crisis also directly impacted your multi-family business in 2021. Lumber prices skyrocketed in some cases by 288%, which made normal expansion projects and basic build-outs prohibitively expensive. No one anticipated this drastic increase and shortage, so most were not prepared. Many businesses felt extremely vulnerable, and some suppliers and outlets took advantage of the crisis and gouged consumers.
These events in the last year and a half have made many companies re-evaluate operations and their overall purchasing strategy. Manufacturers and suppliers meanwhile were dealing with their own set of complications.
The production of items that are critical to multifamily sectors like paint, chemicals, water heaters, and other appliances slowed to a halt. This crippled many companies' operations. As most people stayed home and indoors during the pandemic, owners struggled to replace damaged apartment appliances and make repairs on units since supplies were so scarce. Consumer demand and pressure laid heavy across the global supply chain, and the ripple effects hit everywhere in the world.
Manufacturers, in turn, were put in a difficult situation. They lost or laid off a larger portion of their workforce during the height of the pandemic. However, months later when demand spiked, they were scrambling to hire new workers so they could make, ship, and fulfill the demands from consumers across the globe.
This has been the major snag in the supply chain crisis. The situation has improved in some areas, but as a whole, the crisis is expected to continue for several months before normalizing. Now that multifamily complex owners know what they are dealing with, they are engaging in opportunities that can help bring relative calm and normalcy to their business.
Supply chain risk management
Supply chain risk management deals with identifying, evaluating, and mitigating risks to a company's supply chain. The management of the flow of goods and services that are critical to a business’s success should be a major part of a complete business operations strategy.
There are many potential risks to a supply chain. The pandemic was not the first and will not be the last issue. Other problems that have and will impact the global supply chain include:
- Natural disasters: Floods, fires, earthquakes, tornadoes, etc.
- Political instability: Social unrest, war, terrorism, etc.
- Unpredictable consumer demand (demand shock): For example, the pressure for more electric vehicles and lithium products.
Fortunately, there are methods that you can employ to help mitigate supply chain shortages and price increases. Let us look at a few ways to put your business in the best position possible:
Proactive engagement: Most companies typically have a reactive approach when responding to supply change shifts or disruptions. When problems emerge in the supply chain, like shortages and dramatic price increases, businesses are left reeling. Panic sets in, and a mad scramble begins to find alternate supply sources. But by that time, it is often too late to avoid serious problems.
When you examine market supply chain trends and try to anticipate disruptions, you can then re-direct and re-appropriate funds and resources to purchase and allocate supplies from alternate suppliers.
Supply chain transparency: Having visibility into the supply chain reveals nuances and information that is vital for your company to understand. Monitoring trends and events that might lead to a local or global disruption is extremely valuable data to possess. Establishing relationships with top suppliers and auditing their databases, location dynamics, and performance results is a great hedge against future disruptions.
Software automation: Advanced companies purchase and use software to help them monitor, and manage supply chain circumstances. Software can automate many of the routine tasks and procedures that help you monitor the global supply chain. They provide valuable services like:
- Ratings: Software can allow you to get a rating of various suppliers based on historical performance, which can help you evaluate which partners you can count on in a crisis.
- Spend analysis: Spend data can give you important information on how much you have spent with specific suppliers, and you can monitor price spikes as they arise.
- Visibility: Having a view into the ebbs and flows in the supply chain from beginning to end can give you a sense of security since from complete transparency throughout the supply chain.
Software solutions are allowing savvy companies to turn supply chain risk management into a competitive advantage. When implemented correctly, these solutions enable you to put yourself in a better position when disruption in the supply chain occurs.
Adapt and implement solutions
Being flexible provides huge benefits for your multifamily team. The use of software solutions as mentioned earlier can set companies apart from the pack. One such platform is Raiven, which provides all the aforementioned solutions like supply chain visibility, supplier ratings, and analytics. Raiven also offers the added benefit of negotiated pricing for the best savings. Raiven’s supply chain risk management platform provides a comprehensive solution at a simple level.
Anticipating trends and shifts in the global supply chain does not have to be a reactive and hectic process. Learning from the recent global crisis, companies now can be armed with the software tools that can help them mitigate future disruptions.