For everything from active ingredients, to steel components and plastic containers, 2020 and 2021 were marked by material shortages, delays and price hikes.
The pest control industry has been combatting the ripple effect of COVID-19, inflation and a labor shortage. Admist all of this adversity, however, lies opportunity:
- To cherish employees who have been exemplary, and to take the time to guide their career paths to benefit both them and your company.
- To extend beyond comfort zones, and adapt and embrace new products and practices.
- To resist the impulse of competing on price, and give customers credit that they chose your company because of its quality service and proven problem-solving abilities.
Unlike many other industries, professional pest management has the luxury of having strong connections among suppliers and end users. Pest management professionals (PMPs) rely on their sales reps to give them the best options for helping their customers. In turn, manufacturers and distributors rely on PMPs to give honest feedback about what does and does not work in today’s market, and to respond in kind.
As we have watched the supply chain and labor issues unfold during this pandemic, we have been curious about trends and predictions, and more important, solutions, both short- and long-term. This quest for answers led us to bring you the results of our inaugural “Supply Chain Solutions Survey.” Last month, nearly two dozen pest control industry manufacturers and distributors, big and small, from across the country, took our survey. They shared insights into their current pain points and their strategies for staying on track with minimum disruption to the PMPs they serve.
COSTS ARE CLIMBING
Ninety-five percent of those who took the survey reported an increase in shipping container costs.
Almost 50 percent report their shipping container costs tripled or more from 2020 through 2021.
Relying on parts made overseas is becoming a bigger gamble, so there is a move on the part of some suppliers to invest in domestic manufacturing.
“While we have been battling supply chain issues like most of the world, our strong U.S. manufacturing presence has enabled us to serve our customers without major interruptions,” notes Ashley Brown, senior director, commercial pest control for Woodstream Corp., Lancaster, Pa.
Shipping costs and delays are just part of the supply chain challenge, however. There also are increasing labor shortages — either due to COVID-19 or to the red-hot job market. The majority of survey respondents noted material costs were up between 10 percent to 25 percent; labor costs were up between 1 percent and 9 percent. But the outliers shouldn’t be overlooked: Nearly a third of respondents said labor costs were up more than 10 percent. Nearly 10 percent of respondents said material costs were up more than 26 percent.
In addition to passing along higher costs by raising prices, the majority of respondents noted they had to source parts or materials from more and/or other providers. They also had to be dial back expectations: Nearly one in three had to delay a product launch as a result of a hiccup somewhere along the supply chain.
“It is easy to panic when supplies become scarce and shipping charges are on a steep increase, but it is best to step back and analyze your suppliers and shipping options before passing on all of the price increases to your customers,” points out Pat Kelley, BCE, president of Insects Limited in Westfield, Ind. “We have found new sources of products that we didn’t even know existed until we looked more closely into it.”
To soften the blow of not being able to provide everything PMPs may need in a timely fashion, nearly
half the respondents reported offering volume discounts on items for which they did have a surplus. They recommended alternative products, and promoted early-order programs. In about one quarter of the cases, it just came down to offering products and materials in different packaging, at least for now.
“We have been telling customers to stock up on items they use frequently,” says Gregg Schumaker, director of business and product development for Suffield, Conn.-based Wildlife Control Supplies. “Often, there is little to no warning of shortages, or sudden increases in price, so we do not want them to wait until the last minute.”
AN END IN SIGHT
Nearly half of survey respondents predicted the industry supply chain will be back on track before year’s end. Some manufacturers fear supply chain issues may get worse before they get better this year, due in part to the Chinese New Year and the Winter Olympics taking place in Beijing: Many plants will operate at reduced capacity, or even temporarily cease production. An optimistic 5 percent, however, claim many of the supply chain challenges already have improved, after a rough summer and fall in 2021.
“At some point, you can’t avoid passing along price increases to your customers, but we have been able to limit those increases by looking for alternate suppliers and better-priced shipping options,” Kelley explains. “These shortages will not go on forever, and things should stabilize over the next year.”
Many survey respondents stressed that PMPs should be selling based on value, not price. They also say PMPs should not be afraid to raise service prices.
Some advice from respondents include:
- Don’t panic, be methodical.
- Be open about challenges with customers.
- Seek volume discounts to keep the economy of scale.
- Budget more accurately around your sales forecasts.
- Lower labor costs through technology, automating processes where feasible.
- Do not depend too much on any one line of business.
On the following pages, several of Pest Management Professional’s columnists share solutions to offset mounting inflation and supply and labor costs. We welcome the opportunity for you to share your ideas, too, online on social media or even dropping us a line by phone or email.
We sincerely hope this “Supply Chain Solutions Survey” will be a one-off, a product of its time. But if we find there are more supply chain trends to identify and lessons to be learned at the beginning of 2023, rest assured, we’ll be around again to tabulate the results.