Submitted by mmetz@kcma.org on Wed, 08/25/2021 - 18:25
Industry News Update July 26, 2021

The Kitchen Cabinet Manufacturers Association is committed to bringing you the most up-to-date information in the industry. Here’s a look at what’s happening:

EVERYTHING IS TRACEABLE – UNLESS YOU DON’T WANT IT TO BE

LogYeard

Traceability is a simple matter really. Consumers have the right to know where the products they buy come from, and to trace them back to the source of the raw materials to ensure that they are not linked to anything dodgy, such as deforestation and human rights violations. Consequently, brands, retailers, and manufacturers have the responsibility to provide this traceability information to consumers.

In a nutshell, everything is traceable. Traceability is not only about mapping supply chains and tracing the documents whenever products change shapes and hands.

A good traceability system should also be verifiable and transparent, especially when the products are linked to large risks such as deforestation, environmental degradation, and human rights violations. A good traceability system must include maps of the source of the raw materials, which are published for the public to see and independently verify. The longer a company waits to achieve full traceability and transparency for its supply chains, the longer the company deliberately tolerates possible environmental and social non-compliances. Read more.

 

THE SEARCH FOR DRIVERS AND THE FIGHT TO KEEP THEM

Drivers

Although the career opportunities in trucking are abundant, the driver shortage has been a thorn in the industry’s side for years, and it has only become more severe as freight demand has surged amid the recovery from the COVID-19 pandemic. In fact, the driver shortage has ranked No. 1 on the American Transportation Research Institute’s annual Top Industry Issues list in each of the past four years. While there isn’t a quick-fix solution, getting to the root of the problem is the first line of attack for many fleets. Read more.

 

INDUSTRY IS GROWING, BUT COMPANIES ARE SCRAMBLING TO KEEP WORKERS, SAYS NKBA

MB

Key findings from the National Kitchen & Bath Association's latest survey.

1. The industry is growing, with an estimated 11 percent growth in sales for Q2 over Q1. Double-digit price increases are common across common kitchen and bath products and 60 percent of designers have reported a backlog of at least three months. 

2. Labor challenges are mounting, "As the qualified labor pool continues to shrink with early retirement and career changes, building and construction companies are scrambling to incentivize their current workforce. 80 percent of companies reported increasing labor rates to retain employees – with nearly two-thirds reporting increasing rates of as much as 19 percent. This continues to increase the overall price of the project and delay the timeframes of planned remodels. However, clients continue to move forward with projects and are willing to pay for products and finishes in demand."

3. COVID-19’s impact is lessening, "Members reported a significant drop in the pandemic’s impact on business, giving it a score of 4.9 out of 10 - down significantly from around 6 the previous three quarters. Read more.

 

VIDEO: WHY ARE MODERN SUPPLY CHAINS SO NEEDLESSLY COMPLEX?

 

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"How do companies come up with their intricate supply chains?

"Why are some of these supply chains so convoluted where others are extremely straightforward?

"Will the severe restrictions put on international shipping during the fallout of the coronavirus make companies rethink how far they extend their supply lines?"

In a recent YouTube video, Economics Explained sets out to answer these questions - offering an insightful analysis into a topic that's been at the forefront of many of our minds thanks to the pandemic.

The video examines the complicated impacts of mergers and acquisitions, lobbying, and attempts to avoid certain taxes and minimize costs. These all add complexity to the supply chain in ways you might not expect. Read more.

 

A SUPPLY CHAIN LEADER SHARES THEIR SECRET SAUCE

Top Secret


Significant changes in overall supply management strategy and practice are already happening at progressive corporations. The changes are leading to positive financial impacts above and beyond what can be achieved through a primary focus on piece-price reduction. 

The vice president of supply chain management of a company shares “secret-sauce” information to help others, but on the condition of anonymity. Below is a blurb from their documented supply management strategy—which is shared with all suppliers—that gives a window into their approach.

The top factor listed in their strategy is titled “Leveraging Time.”  To that end, they have a goal to:

“… select and develop suppliers that compress their internal manufacturing cycle time to the point that they can produce and deliver parts within our customer lead time. To the extent that this is possible, we eliminate the cost of carrying inventory both in-house and at the supplier. We eliminate the cost of obsolescence and improve our responsiveness as we are not tethered with legacy considerations. Time compression drives out cost as it helps to eliminate the non-value-added work and overhead associated with wait time.”

How many companies place a statement like this at the top of their supply management’s strategic plan? Why is it important? Because the company has products with very seasonal and variable demand—which brings difficulty in making accurate forecasts and a very short time to react to demand that varies from forecast. Read more.

 

HIGH LUMBER PRICES LEAD TO UNEXPECTED SURPLUS OF CHEESE

Cheese

The soaring lumber price saga of 2021 will forever live in infamy. An odd consequence of the hot U.S. real estate market is how it affected the price of cheese.

Fast and furious homebuilding in North America has resulted in a dearth of wooden boxes that hold 640-pound blocks of cheese, which usually end up as shredded cheeses or cubes on party platters.

To compensate, the industry has produced more 500-pound barrels of cheese, a vehicle for more processed varieties like Kraft Singles and Velveeta ("barrels" really aren't barrels - they're more likely "a plastic bag and a corrugated box with multiple dimensions," Ohio-based cheesemaker Kurt Epprecht told trade publication Hoard's Dairyman.)

Sidenote: Hoard's Dairyman is my new favorite site - https://hoards.com/

The flood of massive barrels in the market has resulted in the lowest prices for processed cheese in more than a year. On the Chicago Mercantile Exchange, cheese barrels traded at $1.3075 a pound at the beginning of August, the lowest since May 2020.