Key takeaways:

• Material shortages can cost you thousands and affect project completion.
• Factors impacting availability include raw material shortages, labor challenges, port congestion, conflicts, and natural disasters.
• Being more strategic about buying, negotiating contracts, and managing your finances can protect your business from material availability issues.
• Raiven is here to help: Our digital supply chain network gives you more buying options and insulates you from material shortages.

Unexpected product delays can cost you thousands and damage the relationships you’ve worked hard to build with your customers.

Dealing with out-of-stock products and procurement delays is more than a setback; it can be a major risk that prevents successful project completion.

Your electrical or HVAC business needs a stronger, more strategic buying process that accounts for the multiple risks impacting your supply chain.

Let’s discuss these risks and explore a few proven trades supply chain strategies to mitigate them.

Raw Material Shortages

There is an ongoing copper shortage. Production for this raw material (used in wiring) is down, as mines dry up and demand continues rising, partly due to electrification and the data center boom.

Your vendors rely on a complex network of suppliers to buy the raw materials and intermediate goods they need to manufacture the products you purchase.

Getting some of these materials can be difficult, leading to slower production and low inventory levels.

Labor Challenges

The need for skilled labor is affecting manufacturers and logistics companies at every stage of the supply chain:

• There is a freight driver shortage in the U.S., primarily due to drivers aging.
• Ports also need skilled workers to keep up with high trades volumes.
• The warehousing industry is reshoring to the U.S., so there is a scramble to find enough workers.
• Manufacturers struggle to fill many positions.

Many hope technology could ease these labor shortages by allowing existing workers to get more done with tech tools.

Port Congestion

If you’ve been following supply chain news, you know that congestion affects most ports. Weather events, the Red Sea Route being too dangerous to use, and ships having to wait days before they can dock have become realities.

A new development is that trade tariffs mean some importers buy in higher volumes (to avoid paying more in tariffs later), and collecting these taxes creates an additional challenge for customs agents without a tariff-collection infrastructure.

Conflicts and Natural Disasters

Floods are the top natural risk that supply chain experts worry about, followed by wildfires. Geopolitical factors, like conflicts or increased regulatory pressure in some parts of the world, can also hinder sourcing.

These factors have one thing in common: They’re hard to predict. When disruption happens on such a large scale, buyers often switch to suppliers in other parts of the world, who might lack readiness and face delays and supply chain shortages.

Shifts in Demand

Buying trends change over time, but sudden shifts can leave vendors unprepared and unable to keep up with increased demand.

• For instance, reshoring and nearshoring are key trends in the electrical supply chain, and some U.S. suppliers are having trouble keeping up.
• HVAC contractors focus on smart HVAC products, air quality solutions, heat pumps, and new refrigerants. Vendors offering these solutions can experience delays and shortages.

Manage Your Risks With These Trades Supply Chain Strategies

Although these supply chain risk factors may be outside your control, you can build a procurement process with strategies that lower your risks.

A Digital Supply Chain Makes You Resilient

Dealing with disruptions has pushed suppliers toward data-driven processes. You can join this digital supply chain by sharing data with your vendors.

This gives you insights into their inventory and pricing, and you can uncover potential production or shipping challenges before they impact you.

Tech tools also support more innovative inventory management:

• Knowing what you have and don’t have in stock makes you more reactive.
• You can automate regular stock audits.
• Demand forecasting tools are excellent for scheduling bulk buying and saving.
• Automated pricing alerts can also help you pinpoint the best time to buy.

Mitigate Risks With Contingencies

Prepare for the worst-case scenario by having backup options. This can be a pre-approved vendor you can switch to if your usual supplier can’t fulfill an order or a list of alternative products.

Some contractors are going further with backup business plans – for instance, you could focus on offering HVAC maintenance plans if new installations are tough due to a shortage of AC units.

Financial Risks

Supply chain challenges lead to higher procurement costs and can reduce your profits. Focusing on financial risks can make a difference.

• Leverage contractual clauses to negotiate pricing and order fulfillment windows. If the vendor doesn’t meet their obligations, secure some financial guarantees.
• A quick and easy way to negotiate safer contracts is to agree that the supplier will match lower prices from other vendors.
• Extension clauses outline what delays are acceptable if a supplier cannot fulfill an order on time.
• Don’t overlook price escalation clauses. These clauses allow your supplier to increase their prices only if certain conditions are met (for instance, raw material prices rise).

Lastly, financial planning can help mitigate your risks. If possible, create a buffer budget with money earmarked to cover unexpected procurement costs.

Market Responsiveness

Building a reactive and risk-adverse supply chain isn’t a one-time event. It’s an ongoing process that requires close attention to the electrical or HVAC market.

• Pay attention to industry trends and regulatory changes (industry associations are an excellent source for keeping up with the latest news).
• Pick suppliers who value risk management and innovation.
• Develop internal expertise – learn more about the latest electrical and HVAC products and procurement tools.

Build a Resilient Supply Chain With Raiven

Raiven is bringing contractors and suppliers together to build a modern, resilient, and connected supply chain for the trades.

As a member, you’ll get access to pre-negotiated savings and a large pool of vetted products and suppliers. If something is out of stock or fluctuates in price, Raiven’s convenient buying tools allow you to find an alternative, making your procurement process more reactive while cutting costs.

Raiven is on a mission to transform buying for the trades. Our innovative platform connects contractors, enterprises and suppliers into a digital supply chain network.

The goal is to simplify sourcing, reduce costs and unlock operational efficiency. New business opportunities become available, and you can scale faster.

Stop wasting time and money on inefficient procurement! As a Raiven member, you’ll get access to:

• Our procurement platform. Manage vendors and accounts with one convenient digital tool.
• Price tracking. Always find the best prices on the supplies you need.
• Exclusive cost savings. Raiven pre-negotiates prices, cutting your costs by 10 to 15%.
• A thriving community. Join a fast-growing group of 2,500+ contractors ready to innovate. 

Visit Raiven for more information on protecting your supply chain from material availability issues.