Below is an update letter I received from one of my many distributors & manufacturers. I would not wait till the last minute to order products for the
October 22, 2021
An update on critical issues affecting you, Classic and other participants in the supply chain we
A. Supply Chain
I’ll bet you have never heard so much about supply chains. President Biden announced some Federal action last week.
Business leaders such as you have known of the issue for months.
An article posted by the Warehousing Education and Research Council July 30, 2021, said:
“. . . according to a survey from Portland, Oregon-based Umpqua Bank . . . The company’s 2021 Business Barometer surveyed 1,200 business leaders from small and mid-market companies across the United States. The study found that most businesses are poised for growth amid continued disruptions lingering from the pandemic, and that supply chain challenges top their list of
key concerns moving forward.”
1. The effort to increase staffing at the west coast ports from 12 hours a day, five days a week to 24/7 will help. But there is a likelihood this will only push the bottle necks further downstream. Our country is already suffering from severe truck and truck driver shortages. Even when products clear the ports there will not be enough of either to fully handle the surge in volume. Action at the ports is important, but the subsequent positive effects on product flow will only be gradual as the rest of the supply chain adapts to equipment and labor shortages. There is talk out of Washington, D.C. that maybe the government should temporarily “federalize” the supply chain process. I don’t know about you, but my congressman already knows how I feel about that.
2.UPS, FedEx, and USPS have announced final dates for shipping Christmas presents. Here is a link to a Yahoo News article that summarizes all of this:
Ok, this is not much different than what they say every year: “If you want a package delivered before Christmas you need to ship it by December 15. As the company you count on to deliver packages to you so you can have them for your customers, I want to make two points here:
a. Even if you order by December 15th, we may not have it. The shortages we are dealing with are unprecedented – massive really. Three months ago I wrote you and told you despite all efforts we have been unable to get our inventory levels back to 100% of what they were in 2019. We were at 70% of 2019 then and on September 30th we were at 68%. We have millions of dollars on open purchase orders. This product is waiting in China, at a port on the west coast, or at a terminal waiting for a truck and/or driver.
b. I discussed the situation with Brian Graham (Brunswick) a few days ago. He offered some interesting observations:
• They have dozens of containers full of bags and shoes somewhere between their supplier and their Muskegon warehouse. He is still hopeful much of the new product (items they showed off at Bowl Expo and tradeshows) will arrive before the end of the year.
• Like all of us they face daily challenges. For instance, the communication from their suppliers, the ports, and trucking firms is so poor they pretty much have no idea what is on an individual container until they open it up when they receive it. This makes planning and anticipation very hard to do.
• Ball sales are another subject. Fortunately ball manufacturing is still a North American function. Can you imagine what our sales would be had the ball supply not remained as strong as it has? What is notable is that bowlers have shown more of a desire to just plain buy than to buy something specific. Often, we don’t have the bag or the shoes they want but, rather than walk away, you offer something they will buy.
3. In a recent discussion with David Idzior, our inventory management specialist, he noted that as retailers our customers are in a slightly better position than many of the retailers in this country who are so concerned about their expected inability to get product from their suppliers, primarily because most of it comes from China. This would apply to retailers who count on Christmas sales to drive the success of their business.
Best Buy, Home Depot, Walmart, Costco, Target, etc. – all these companies are counted on for Christmas presents and most of what they sell comes from China. If the concern about empty shelves is even partially true will this shift holiday buying to industry outlets such as ours where, although the bag and shoe outlook is concerning, balls made in North America remain plentiful? Maybe. It is certainly a possibility we want to be ready for.
Keep in mind extraordinary efforts are being made to provide as much inventory as possible:
a. In a mixed message Paul Sylvia (Dexter Vice-President) wrote to let us know they are being “bombarded” with containers (this is for all H.H. Brown brands, not just Dexter); but the volume is so high their staff are being overwhelmed so there will be a delay in the receiving and shipping of our stock orders. He assures us they are doing everything possible to receive and ship the shoes we are all waiting for. The good news? At least they are in the states and on bowling industry property.
b. Shipping costs have become astronomical. Containers that used to cost $2,500 are now being quoted at $25,000 – and this is for product that was ordered months ago. Brunswick, KR, Dexter, and Storm have all paid margin destroying fees to keep our supply chain open. The shipping and logistics companies are making record profits. There have been demands that congress investigate and punish those profiteering from the situation. There is one problem - these
shipping companies are not U.S. based – they are global entities not directly subject to United States reach.
c. I would like to address some trends that you might find interesting. Within the market we serve there are some very real issues but also possibly some misconceptions. For example, and this is based strictly on our sales the last 90 days, and I cannot speak for the greater market, but from Classic’s experience, comparing our 2021 sales to 2019 we notice the following:
• Ball sales as a percentage of our total sales are up from 54.6% in 2019 to 62.3% in 2021. No surprise here, except you, like me, might have thought it would be a bigger difference. But it is significant and speaks to what I have said earlier in this note.
• Shoe sales as a percent of our overall sales, as expected, were down from 20.7% to 13.9%. As a percent drop that is 33%!
• Bags: Now here we have statistics that disprove what many believe is true – that bag sales are down because there are no bags available. But that is not the case, at least based on what you have bought from us: Our bag sales as a percent of our total sales the last 90 days of 2019 were 10.5%. In 2021, 10.3%. What I think this means is (a) it is true you do not have access to exactly what your customer wants to buy but (b) you have been creative at helping your customer find a solution to their bag needs by finding an acceptable alternative model.
• Accessories, also a product class we all have come to accept is in short supply, has at least up until now, managed to remain viable. Our 2019 90 day sales of accessories were 14.3% of our total. 2021 has been less, but still was at 13.5%.
I believe all of this speaks to the creativity and ingenuity of our suppliers and our shop operators to insure something is moving through the supply chain.
d. I have heard concerns that there may be lane care chemical shortages. I have spoken to our suppliers, and I am convinced they have very carefully and deliberately managed the flow of their components to make sure no shortages occur.
4.Confidently Clean: Reminder about our Confidently Clean Product Line… A great opportunity to continue to make your customers feel confident that you operate a clean and safe facility for them all year round. We have put several of the items in this category into our closeout section to make them affordable, as we know there have been several shortages on these items again. Make sure to stock up before the winter season!
The holiday season is fast approaching. Once again, we are strongly encouraging shops to place orders for backordered items. We always fill these orders first – and we also always call to make sure you still want the item. But if you do not have the item backordered but hope to place an order when we get a delivery everything we receive may be spoken for and no inventory will show up in our system. It is very usual for us to have 200 of an item backordered – we have 500 on order
from the manufacturer, but we receive only 150. Those 150 go to the oldest backorders in our system. Save you share by placing an order so that you are in the queue. We will do everything we can to have as much inventory for you and your customers as possible.