When Demand Exceeds Supply

If you deal in the hardwood industry you are surely familiar with the seemingly constant changes in supply and demand. If you are a hardwood supplier like we are increased demand would seem like a nice problem to have. But that is not always the case. If your company can’t meet that demand of your regular customers, the problem can quickly turns into a nightmare. And from a hardwood buyers perspective, when you compete for the same limited raw materials as others in your industry and supplies are short, rising costs can seriously affect your company’s bottom line.

At CAMTEEC LTD, we believe in developing strong relationships with our customers, so together we can plan, prepare for and overcome the challenges that come when demand exceeds supply.

Providing needed and uninterrupted raw materials to customers who count on you for their business success is only one facet of what a valued supplier can mean to a manufacturer. An ideal vendor also helps assess the viability of a proposed new product line, explores cost-cutting opportunities, and identifies opportunities for growth. A supplier can also serve as an invaluable repository of industry-related information, highlighting current and future trends that may have a marked effect on your business.

In other words, a valued supplier should be part of every business’s growth strategy.
The prices a supplier charges for materials are always an important consideration in determining who to work with. Here are other key elements to keep in mind:

Dependability. There’s no way to overestimate the importance of knowing you’ll be shipped the correct materials (in the requested amount) at an agreed-upon time and in good condition. When it comes to delivery, so many things can go wrong it’s a huge relief knowing you have a supplier you can depend on.

Location. Obviously, a supplier’s location may influence time of delivery, additional freight charges, and other fulfillment issues. A supplier with multiple locations will likely offer the best delivery options for your business.

Stability. Some new vendors try to get a foothold by undercutting their prices, a tactic sure to attract some would-be customers. But that’s taking a huge gamble, especially during times of tight customer demand. By contrast, a supplier that’s been around for decades, with a proven reputation and steadfast customer base, is far more likely to deliver materials when and how you need them.

What else goes into the process of selecting the right supplier? Consider looking for vendors who invite you to visit their facility, speak with their employees, check out their inventory, etc. Transparency is a highly desirable—though infrequently demonstrated—quality among suppliers.

A good vendor strives to be more than a supplier; they work at forging partnerships with their customers. A supplier/partner can alert you to a pending shortage of materials and help design strategies to meet your supply needs even in challenging times. They will seek to understand your business and develop alternative solutions that could help you when times get tough. This kind of assistance is a differentiating factor and something that should be sought after even in a commodity markets.

Finally, another key objective we feel should be considered is reducing the overall number of suppliers you work with. Multiple suppliers require multiple administrative costs and a higher potential for snafus in order and delivery. There’s greater efficiency if you can rely on a small select number of suppliers, especially when you’ve developed trusting relationships that can withstand the ups and downs of the market.

If you would like to discuss best practices in managing hardwood supply and demand give us a call or subscribe to this blog and post a comment below. We would welcome the conversation.

One Reply to “When Demand Exceeds Supply”

Leave a comment