Steve Welch, Sales Director at Beesley & Fildes, discusses the challenges and opportunities the sector has experienced in 2021 and the emerging trends for 2022.
Ask anyone from any segment of the construction supply chain what the main challenges have been over the past 12 months and they are all likely to name the same four things: product availability, lead times, price volatility, and staffing issues. We’ve all been in the same boat, but the likelihood of sinking or the capacity to swim has been dependent on each company’s existing resilience and ability to respond quickly to a changing commercial landscape in turbulent times.
Product availability
When the pandemic hit in 2020, the world shut down for several weeks. In the construction sector, a lack of clarity about whether construction was a key worker occupation meant that there was a gradual return to some kind of business as usual but the repercussions of that first lockdown are still being felt as we reach the end of 2021.
A hiatus in production for all kinds of construction products meant that building products manufacturers had to play catch up as soon as the market started to recover. They are still catching up because, of course, after the initial few weeks of zero activity, everyone began kickstarting projects again at the same time, leading to a sudden spike in demand. As a consequence, the buffer between scheduled production and forecasted demand was lost and for many companies in the supply chain, it has still not been recovered.
There are a number of contributory factors here, not least the escalating costs of raw materials and continuing price volatility (while the price of timber is now coming down, for example, the cost of bricks is continuing to rise). However, the ability of product manufacturers to respond to market conditions and their strategic decision making are also integral to the challenges and opportunities experienced by the builder’s merchant sector.
Where availability has been low, relationships have been critical in securing supplies and understanding where those potential gaps in availability might lie.
As an independent family business with 11 branches in the North West of England, Beesley & Fildes has been a much easier customer for our suppliers to deal with than much larger companies with hundreds of branches. This has helped us keep relationships personal and secure excellent product availability for our customers. But there have been tough decisions to make along the way and we have had to source alternative products where availability has become a serious issue, because our main priority has to be keeping our customers’ projects moving.
Looking forward into 2022, it is clear that availability will continue to be a challenge for some product categories. For example, increasing energy prices and transport issues have impacted on brick production and manufacturers have adopted a strategy of moving away from Class B commodity brick production to higher margin facing bricks, creating challenges with Class B procurement. At Beesley & Fildes, we are addressing this by offering customers concrete alternatives and the builders’ merchant sector will need to continue thinking creatively and responding to market challenges like this with customer-focused solutions in 2022.
Lead times
Linked to availability has been the issue of lead times. Reduced availability has meant that product manufacturers have waited longer for materials, which has had a knock-on affect across the supply chain. In a parallel with this, increased shipping costs, port delays and the shortage of drivers have not only resulted in longer lead times, but also in issues with lead time reliability.
At Beesley & Fildes, we have taken a threefold strategy to tackling this issue. Firstly, we have focused on communication, both with our suppliers and our customers. We have challenged our suppliers to be candid with us about lead times and availability so that we can help our customers plan and order in time to avoid project delays. There has been a period of adjustment when it comes to lead times, so we have also used sales data to help us forecast demand and procure stock ahead of orders.
The availability to stockholding space at our branches has enabled us to do this and in 2022 we will be building on this capability with the addition of a large distribution hub in Widnes that will hold stock for our entire branch network in 2022.
Price volatility
Some of the price increases we have seen over the past year in commodities including steel, timber and glass have been eye-watering. We are now seeing some of those materials coming down in price but it continues to be a mixed picture, and many building products manufacturers have already announced price rises for 2022. Increased operational costs due to energy price rises, staffing costs, transport costs and import tariffs are all affecting price points and there is little merchants can do to protect customers from this uncertainty.
It is within our remit to be sympathetic to the challenges our customers face when pricing a job, however, because they are relying on us to help them bring their project in on budget and without delays. Again, supplier relationships are an important part of addressing this challenge and, for Beesley and Fildes, membership of the CBA buying group gives us the right combination of purchasing power and local, personal service. The knowledge of our category specialists is also important because they can advise our team and our customers on potential alternatives to products that customers find cost prohibitive. This type of value engineering support should be integral to the service a builders’ merchant’s offers in 2022.
Staffing and recruitment
At Beesley & Fildes, we are very fortunate to have a loyal team, many of whom have been with the company for years (if not decades). Recruitment of drivers to expand our site delivery services has been challenging, however, and, of course, managing staff absences due to COVID has also been a feature of 2021. Again, much of the response to this has been about remaining agile and creative. We have asked members of our team to take on added or different responsibilities, to expand their knowledge and skills and to work collaboratively to serve customers.
As we look ahead to 2022, we can take forward valuable learning from this. There are opportunities to enable people to develop multi-faceted career paths, leverage peer learning and redeploy skills where they are needed most. It is also evident that looking after your team and encouraging a positive company culture must be a priority for any builders’ merchant business.
Continuous change
We leave 2021 as we entered it; against a backdrop of continued uncertainty. But as we have adjusted, relationships have grown stronger and we have learned to adapt, giving the builders’ merchants sector plenty to look forward to in 2022.
