Supermarket shelves stripped bare of certain goods. Restaurants forced to discontinue some menu items. Popular products not being manufactured, or in short supply due to shortages of raw materials. Equipment not being properly maintained due to non-availability of critical spare parts. Labor shortages affecting the way we do things. And on top of it all, increasing costs due to inflation. No, these are not plot lines from Hollywood’s latest doomsday movie. These are some of the end results from the impact of the ongoing world-wide supply chain issues we are all facing.
Thanks to the ongoing impact of the pandemic and other factors, the vulnerability of our global supply chain that keeps our modern society running has been exposed. It’s been a costly and inconvenient couple of years – and it doesn’t seem that it will ever end!
Facility managers and EH&S professionals have not been immune to this issue. In fact, supply chain issues have had a big impact on environmental, health, and safety performance, according to the EH&S professionals, plant/facility managers, and maintenance managers I’ve reached out to over the last several months. Basically, anybody with boots on the ground relative to manufacturing in this country has had to struggle with the ongoing supply chain issues.
Much of our work at Envision Environmental, Inc. has also been affected by the status of our supply chain - from lack of equipment availability for field work, to subcontractor availability due to labor shortages, to the simple lack of availability of common replacement equipment and expendables for treatment systems that we operate for clients – we have all been affected.
We realized just how vulnerable we are due to the supply chain issues as a result of our licensed treatment system O&M services that we provide. Occasionally, a pump or blower or some other common piece of equipment will need to be replaced in these treatment systems. And for the last 25 years or so, in most cases, we would just contact an equipment vendor or log onto the website for an industrial supply company and order the needed part. Typically, the needed equipment would arrive at our office the next business day, or within the week at the latest. Quick and easy, and our treatment system is back running normally in no time.
Now, we’re finding that even common spare parts and equipment, such as small pumps or even water and air filters, just aren’t available. It’s actually been quite shocking to sometimes go on supplier websites and see just how many items are out-of-stock or not available for weeks or even months. This has become almost commonplace with many equipment suppliers due to the ongoing supply chain issues.
In some cases, we’ve resorted to calling manufacturers directly for equipment and spare parts. The typical response we get from manufacturers is that they just don’t have all the parts necessary to make the piece of equipment that we need due to their own supply chain issues. So, it could be anywhere from a couple of weeks to a few months before they will be able to ship the items we need.
Currently, it is taking anywhere from four to six months to get some of the replacement equipment we need, which in the past, we could have had in a matter of hours. And unfortunately, we are far from being the only ones experiencing this.
What EH&S Professionals Are Saying
Over the last several months, I’ve reached out to colleagues to see how they are faring with the supply chain issues. Unfortunately, most of the folks I communicated with are also having problems obtaining equipment and spare parts.
We also heard that for manufacturers, raw materials are also scarce. That obviously affects production. Whatever that facility makes… they can’t make their target production output right now. And the impact trickles down.
If the facility isn’t running normally due to lack of raw materials, then their workforce isn’t fully engaged. At some point, that means they must start laying people off.
That’s a predicament, as we’re seeing that many of our clients actually need additional workers due to the country’s ongoing labor shortage. If they had all the raw materials available to them, they would have a hard time fulfilling orders anyway because they don’t have enough staff.
In some cases, workers are forced to wear many hats due toco-workers being laid off or due to the ongoing labor shortage. This results in an increase in potential exposures, including a heightened risk for accidents. As a result, EH&S professionals are forced to re-evaluate job hazard analyses and other safety-related issues because we are all forced to now do jobs and tasks differently.
Potential liabilities are actually a huge issue also when equipment or processes aren’t functioning correctly or cannot be maintained properly. Accidents increase substantially when workers are operating equipment that is not maintained properly.
And regulators aren’t cutting anybody any slack. We still need to meet permit requirements and other standards.
Prices Are Going Up
Another issue that many raised is related to the principle of supply and demand. The scarcity of raw materials means prices are going up. And higher production costs are passed on to the end user, (i.e., the customer).
Of course, you also have a related issue with spare parts and consumables, like oils, greases, fuel, and more, which facilities need to keep equipment running. Those items are getting more difficult to obtain, and their prices are going up due to scarcity and inflation. For example, the price of fuel to run equipment is considerably higher now than it was just a few months ago.
I’ll give you another quick example. We were recently helping a client out with a remediation effort associated with an oil release. We needed to obtain several 55-gallon steel drums. We used to pay around $40 for a drum within the last year, and we used to be able to obtain as many as we desired. However, we were shocked when we were recently quoted pricing as high as $250 per drum from some of the local suppliers due to the extremely limited availability of the drums. Needless to say, we ended up addressing the oil release without the use of drums.
Again, these increased costs are passed on to the consumer, whose dollars just aren’t going as far as they used to due to inflation.
What Steps Are Being Taken
The more you look at this, the more problems continue to pile up. It all has a compounding effect. On top of the lack of raw materials pushing up price, you have inflation pushing up prices too.
It all makes for a very difficult time for all of us. I remember reading articles last summer that commented on how all this would go away by the 2021 holidays. These articles predicted some pangs because we may not have been able to get that popular gift for our kids at Christmas, but supply chain issues would be managed by the new year.
But that’s clearly not the case, and I don’t think we’ve seen the full impact of this yet.
As a result of these issues, when looking at equipment maintenance, facilities are now forced to prioritize and alter well-established maintenance programs and schedules. Quarterly maintenance has been shifted to semi-annual or even less frequent. A bit of advice, if you need to reduce your maintenance tasks, try not to reduce your maintenance inspections. Keep up on inspections because the sooner you identify a problem the more time you may have to obtain what you need to resolve that problem.
You must also consider how reduced maintenance factors into the lifecycle of that expensive piece of equipment. Will you need to replace that piece of equipment in 20 years now, instead of 25 years?
A more immediate problem: How will lack of maintenance impact operations? A piece of equipment could break down and not be able to be fixed in a timely manner. That’s compelled facilities to evaluate what spare parts are critical to keeping their key operations going.
Contributing to this issue is that facilities were no longer keeping large inventories of spare parts and replacement equipment in-house due to the “just-in-time” availability of these materials from suppliers. That strategy, while saving costs, has always been risky.
And now that “just-in-time” has turned into “who-knows-when”, this management practice has turned downright dangerous.
As a result, re-evaluate your spare parts needs and establish a critical spare parts list. Do your best to obtain those parts. Share that list with sister facilities in your organization. Many times, something that you may need may already be in stock at a sister facility. Spreading a spare parts inventory out over several facilities may increase the likelihood of you obtaining those parts in a timely fashion and reducing your overall exposures.
Some clients are also sharing labor among sister facilities in an effort to help alleviate labor demands and reduce the probability of accidents.
We really need to prioritize the reduction of increased accident rates due to labor shortages to ensure that we continue to operate safe facilities and maintain reasonable insurance costs.
How is the need to re-evaluate how we do things going to affect how we do things? Make sure you re-evaluate risks associated with job responsibilities, especially if you are making adjustments to your facility operations due to labor, equipment and material shortages. Remember, the only permanent thing is change. So those well-established safety programs and maintenance schedules that worked so well in the recent past, probably need to be adjusted due to the ongoing supply chain issues. As a result, we need to accommodate change in order to make sure we all continue to work safely.
We don’t know the full effects yet, as I said, but they will be extensive and far reaching… for years to come. And it’s caused managers tore-evaluate how they run their facilities from top to bottom as practices and SOPs employed for decades are really no longer applicable.
I can’t solve the supply chain issues plaguing the world right now. But I can help you navigate these challenging times to help your facility continue to operate in the most cost-effective and safe manner. We can also share with you what others are successfully doing during these trying times.
I welcome you to call me, Mark Roman, to discuss your specific issues. You can reach me at 609-208-1885 or get in touch via e-mail at markroman@envisionenvironmental.com.
