Supply Chain Delays

October 20, 2021

 

Dear Fleetwood Customers,

 

As the world recovers from the pandemic shutdowns, manufacturing and construction seem to be the slowest to recover. The shutdowns caused a deep and lasting ripple effect to every layer of supply. Fleetwood weathered the initial supply storm better than most because of our unique approach to inventory. We craft most of our hardware and stock an abundance of aluminum inventory. During 2020 and the first half of 2021, production lead-times were 5-7 weeks for stock finish orders and custom finish lead-times remained unchanged. This success was achieved while our aluminum suppliers were experiencing historic labor and material shortages starting in mid-2020.

 

However, in April of 2021, extrusion lead-times sprang from 6 weeks to 6 months in one day. Some of this stems from the inability to move goods from port to land. Hundreds of cargo ships are being prevented from offloading their goods. The drastic jump was manageable in the short term, and we started ordering 5 months earlier than normal, as did our suppliers’ other customers. The deluge buried them in business, which strained labor and metal needs. In retrospect, they recognize they should have instituted staggered lead-time increases, but the damage was already done. As a result, the 6-month lead-time, which was to last only a few months, has lasted 7 months at the writing of this letter and may continue through the first quarter of 2022.

 

Why multiple ship date changes? Our ship dates are based on labor capacity and material on hand, factoring in the challenges noted. Why substantial date changes? There are contributing factors, but the simplest explanation is two-fold; first, shipments are often late by several weeks. Second, when extrusions arrive, a small percentage is rejected by QC, which means some orders get pushed out. As an example, if the Hinged Door Department can produce 100 doors a day but cannot make doors for three days, those 300 doors are the first to be completed when the material arrives, and all others get pushed back three days. In many cases, multiple extrusions are involved and the delays are compounded. Whereas other aluminum manufacturers have between 200-500 profiles, Fleetwood stocks over 1,600 different profiles in three different finishes. The customizable nature of the product line and sheer volume of extrusion shapes has exacerbated this weekly challenge for the Purchasing and Production Flow departments.

 

Why did ship dates for orders placed in mid-October increase? The Production Flow department blocked out several weeks in January 2022 to catch up. This was a reaction to our extrusion supplier’s optimistic forecast of deliveries. Therefore, orders placed in the middle of October included these blocked out slots.

 

What is Fleetwood doing to offset these frustrating delays? Fleetwood hired an additional 15% workforce, which is challenging these days. These men are not needed to produce orders but rather to help bridge the constant ebb and flow of manufacturing delays. It is common for orders to be started, only to be paused to wait “a few more days” for a key part needed to complete the order. Additional efforts:

  • The factory is working 60-hour weeks.
  • Providing more factory glazing to reduce field labor and glass crate trash.
  • Partials are automatically shipped if at least half the order is complete.
  • Discontinuing slow moving, high labor items from the product line.
  • Utilizing air freight when possible to bypass possible cargo ship delays.

 

I am grateful to each of you for bearing with us during these difficult times. We hope to be through the worst of it by February.

 

Mark McCoy
President