• Post-pandemic Supply Chain Issues: How One Small Business (Save Energy Company) Chose to Meet the Challenges

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    November 15, 2021
    Bill McGowan
    BMCG Creative Services


    It’s a well documented fact supply chain issues have created havoc across most business sectors.  Long lead times. Out of stock items. Reduced inventories. Price increases.  These are all hand-wringing realities of post-pandemic life.

    The result of all this has been uncertainty – the depth and breadth of which few in business today have ever experienced.  This uncertainty brings with it pressure – the type that strains well-oiled systems, frays the nerves, rattles the emotions.

    Just as with the virus that caused this scenario, no one is immune.  Businesses large and small are experiencing the same uncertainties and pressures.

    What’s it going to take for businesses to survive?   To get at an answer, let’s take a look at one small business.

    Save Energy Company has been a provider of replacement windows and doors for 39 years.  They are based in Petaluma, California servicing residential and apartment property owners in San Francisco, Marin, Sonoma and Napa counties.  The company – much to its surprise and delight – experienced its best year ever in terms of sales and profit in 2020.  Though the sales momentum has carried into 2021, supply chain issues with all of their window manufacturers has turned a once bursting installation calendar into something more akin to swiss cheese – riddled with holes.

    In 2020, installations were at 84% of sales.  For 2021, they’re at 40%.  The volume of installations for 2021 is 47% that of 2020.

    Save Energy Co has a fleet of three box trucks that support a team of 11 installers.  Over half of them have been with the company more that 4 years.  The most senior installer has been with the company 22 years.  Combined, the team has over 66 years of experience.

    The in-house, trained and certified installation team is a valuable asset to the company.  It is also a huge expense.  A full calendar means the team pays for itself.  Huge gaps in the schedule mean those salaries come out of company profits.

    Faced with supply shortages, unreliable delivery of ordered product, huge gaps in the installation calendar and 11 hungry mouths to feed, a small company like Save Energy Co has three options as to how to best proceed:
    • Lay the team off for 4-6 weeks to give the manufacturers time to catch up with deliveries so the installation calendar can be filled-in more completely and consistently.
    • Schedule the team to work fewer days a week, sending them home for more days off.
    • Install what can be installed and create work for the guys during the gaps keeping their income flow steady.

    Which option did the owners, Pat & John Gorman, choose?

    “You’d think it would have been a tough choice trying to weigh the options,” explained John Gorman, “but it really wasn’t. We’re a family-operated business and that means something to us.  I’m always thinking, ‘How would I want to be treated?’”

    The Gormans went with option 3 which essentially meant business as usual.  What about the down time?  Was Save Energy Co going to give the guys paid leave?

    No.  The crew wanted to work, not sit around.  So John decided it was time to spruce things up.  The installation team was tasked with re-organizing the warehouse, top to bottom.  It wasn’t a “spring cleaning.”  It was a complete rethink and redesign.

    The crew also went to work on the in-house showroom. “The sales team had been asking for changes in the showroom for longer than I want to admit,” explained John. “The holes in the installation calendar created the perfect opportunity to complete the work around the office.”

    As the remodeling activities progressed, Save Energy Co’s main window manufacturer announced it had made key operational adjustments and lead times were going to shorten.  Orders were going to be filled and delivered in a more timely and consistent manner. The pace of order fulfillment was picking up.  The installation calendar was getting fuller.  Thing were moving in the direction of becoming “...a higher percentage of normal,” commented John Gorman.

    Like all businesses, Save Energy Co faced significant challenges – ones that could easily break the company.  Rather than panic and make drastic short-term moves, the Gormans determined the best option would be to keep things as normal as possible.  They chose to take the opportunity presented by the post-pandemic supply chain issues to make key improvements to their systems and facility.  They chose to work their way through the maze of uncertainty with the full team complement so they could do what was most important for the business long term – stay true to who they were at their core.

    People before profit. 
    Respect the family roots.


     
    Contact:
    Bill McGowan, Marketing Consultant
    bill@bmcgcreative.com, (323) 793-9393
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