Overcoming supply chain challenges

with customer-managed inventory 

Current supply chain challenges are affecting everyone, from food, dairy, beverage, and pharmaceutical manufacturing to suppliers, distributors, contractors, builders, operators, and consumers.

No one seems to be immune to it,” says Natalee Kauffman, CSI Sales Manager in Springfield, Missouri.

Because volatility up and down the supply chain makes planning so difficult, some of the people who feel the pressure most are construction managers trying to keep projects and plant construction running on time.

Supply Chain Issues

What supply chain issues are plants and processors facing?

It’s the construction managers--some of the best planners in the world--who are now having to work with lead times that are more and more challenging. “Think two years ago, eighteen months ago, when project tubing for a standard job probably had a six or an eight week lead time,” Natalee said. “Project and construction managers and engineering firms that do this all the time could order what they needed and keep the schedule running like a top.

“Now, you are talking about project tubing that could be up to forty weeks, forty-seven weeks out. So that's a major change.”

Contingency planning makes a difference

In some cases, contingency planning can help when the supply chain is this unpredictable. If more than one brand is acceptable, for example, submitting on both can save time when one brand is out of stock. Is more than one finish acceptable? Submit on both so they’re both approved in case one becomes unavailable.

“A great example of contingency planning is when you hear a call out on a BPE spec of an SF1. An SF1 is a PL or a PC finish,” Natalee said. “Submit on both. Make sure you're getting everything approved on the front end so if you do need to make an agile adjustment to keep your projects on time, you can.”

“Another issue we hear a lot about right now is price increases. In just the last week we received notification from five major OEMs on price increases, and this is the second price increase of the year for three of them.”

Extended lead times plus recurring price increases make bidding a job hard for project managers and construction managers to do accurately. Competing on price is risky for the same reasons. “Contingencies are great to quote, but even contingencies are risky right now because of inflation,” Natalee said. “That’s why we’re also seeing a shift from being able to lock in a quote that would be good for a year to having 24- to 48-hour expiration dates.”

How can processors, resellers, OEM's, and mechanical contractors reduce or eliminate supply chain risks?

Because of inflation and supply chain challenges, contractors and managers are restructuring the way they work with vendors. They’re looking for companies they can count on for material allocation and support through release, acquisition of material, and distribution.

“We saw a major shift with the introduction of Amazon to the world, and no one was a distributor any more, everyone was a reseller. A lot of people didn't stock anything; they bought and resold, and sometimes never handled it.” That model is now working for many A & E firms.

“We’re in a different world, and it’s here to stay,” Natalee said. “This is the new normal and there is no sign, according to many articles — including one in the Wall Street Journal just a couple of weeks ago— that the supply chain can fully recover to its pre-COVID state.” The need to adjust and be agile in project planning is as strong as ever.
Podcast Cover Image
Listen to episode one of the Sanitary Industry Podcast, where we sit with Natalee Kauffman to discuss the supply chain issues our customers are experiencing and how they can reduce or even eliminate these problems.

For a partnership right now to be fruitful, firms want a distributor that provides space and stock and the ability to help manage and even keep some of your materials on hand so builders can use them when they need them.

Planning has changed throughout the process--not just at the construction phase. Take startup for example. “In the last 6 months, with valve lead times by all of the major manufacturers being extended, I would never have recommended a valve body as a startup spare. That's a static part; it doesn't move, and it's not going to wear out.

However, now when you're talking about startup and someone inevitably damages a valve while installing it or by dropping something on it so the valve doesn't seat, you are talking about a sixteen-week lead time for a replacement. No one has any more tricks up their sleeves to get startup back on track, so we think about engineering and startup differently now. It’s about the lead times and what your distributor stocks — and whether they can support you with the agility you need.”

Supply chain delays affect equipment maintenance from day to day, training and implementation of operators and maintenance teams, as well as construction, start-up, and commissioning, all the way to the care in the lifetime of that product. They all require different planning for fluctuating lead times, and one of the most important hedges against volatility is partnering with the right distributor.

What is CSI doing for customers to help ensure process piping and startups move forward without material delays?

Warehouse Shot

In the last year CSI has implemented a Customer Managed Inventory (CMI) Program. A lot of people are familiar with vendor managed inventory (VMI) in which a vendor counts the inventory you store in your facilities.

CMI flips that arrangement: you count the inventory you’ve purchased from and stored at your distributor. CMI offers several advantages in a time of high inflation and supply chain challenges.

"With CMI customers are able to monitor inventories and place orders farther in advance than they can with less frequent VMI updates. CMI is designed to help reduce the stress of wondering if you’re going to have materials available when you need them.”

With customer managed inventory, you purchase materials at more favorable prices before you plan to use them. You own the materials you buy, and you store them at CSI, so you don’t have to worry about space limitations in your own facilities. You coordinate with CSI about release dates so the materials they can be consumed on the job in a just-in-time fashion.

CSI is equipped to deal with several supply chain complexities.

  • CSI has 300,000 square feet of storage space.
  • We have more stock and on hand of spares than ever before.
  • Over the last year we've tripled our spares quantity count. And we also have fittings and tubing in stock to keep projects running on time.
  • The CSI team includes experts who know whether alternative parts and equipment can meet specifications when originals are out of stock.

Next Steps

With four CSI distribution locations, CSI can keep product close to the project and use dedicated shipping to prevent transit damage. In some cases commercial freight carriers have fallen behind and customers report an increase in sloppiness and materials damaged in transit--as opposed to shipping in dedicated trucks that ensure tubing, fittings, valves, and pumps all arrive safely.

Stock held at CSI is fully auditable, so accounting or third-party auditors can easily access and verify customers’ holdings. “CMI is the way we've seen a lot of contractors and construction managers get their arms around the ever-changing supply chain and delivery issues.”

To learn more about inventory options through CSI, contact us today.

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Contributing Author

Natalee CA Image
Natalee Kauffman is the Sales Manager for CSI. Natalee received her degree in Chemistry from Truman State University and her degree in Industrial Distribution from Texas A&M University. She has over 16 years of sales experience, with more than nine years in the hygienic processing industry. Natalee focuses on leading a team of highly-skilled individuals passionate about helping customers achieve their goals.


Central States Industrial Equipment (CSI) is a leader in distribution of hygienic pipe, valves, fittings, pumps, heat exchangers, and MRO supplies for hygienic industrial processors, with four distribution facilities across the U.S. CSI also provides detail design and execution for hygienic process systems in the food, dairy, beverage, pharmaceutical, biotechnology, and personal care industries. Specializing in process piping, system start-ups, and cleaning systems, CSI leverages technology, intellectual property, and industry expertise to deliver solutions to processing problems. More information can be found at www.csidesigns.com.