Service Dealer held another of our regular group video calls with senior representatives from the supply side of the industry this week.

Again we extend our thanks to everyone who took the time to join us, including this week some new faces - all representing manufacturers, suppliers, trade associations and business service providers.

After the call, Duncan Murray-Clarke, Service Dealer owner, said, "As Steve reports today, the collective feedback from manufacturers this week was pretty unanimous and it seems communication is going to be all important this season. Manufacturers' communication to you the dealer network, and you in turn to your customers, will be vital. It is clear that lack of stock is going to be a much wider problem this year across most retail industries and so customers should understand the problems you are facing.

“Planning to minimise the impact to customers (wherever possible), as well as maximising workable revenue streams, seem to be the priority this year. We at Service Dealer will continue to communicate with manufacturers and you the dealers, to keep you as informed as we possibly can.”

Supply and demand

We are of course conscious of not retreading ground previously covered in these discussions, however as you might imagine, there is still one issue dominating the industry's landscape right now. Both manufacturers and dealers cannot fail to be preoccupied with the problems surrounding supply of goods and parts. It's an ongoing situation that, disappointingly, does not appear to be close to resolving anytime soon.

What makes this all the more frustrating is we're are being told that across the garden machinery, professional turfcare, utility vehicle and agricultural machinery spectrum, demand could not be higher. And being unable to meet this demand is just as concerning for the manufacturers and suppliers as it is for dealers on the front line.

The message that 'everybody is in this together', came through to us loud and clear on the call this week. It's clearly a situation that no one is happy about. Companies stressed that they are doing their utmost to find ways to mitigate delays and get machines into the hands of dealers as quickly as possible - but they say the global situation means that it's mostly out of their control.

"Everybody is in the same boat - which is no boat at all!" is how Craig Hoare of Hayter summed up the situation. If it's not wholegoods getting held up somewhere along the distribution line, it's components - or, increasingly, raw materials. As discussed before, these delays stem from factories around the world either shut down completely or working at a limited capacity, a lack of containers and a scarcity (and associated skyrocketing cost) of shipping options.

Dates slipping

Once a consignment does make it on to a boat, pretty much everyone we spoke to this week had stories of being given an arrival date - which is passed on to their awaiting dealers - only to have that date slip, by anything up to 10-14 days. With a depressing regularity. 

What was interesting to hear on Wednesday, was that sectors that until now hadn't perhaps suffered the effects quite as keenly as the garden machinery sector, were now starting to feel the pinch. Some of the big ag guys, for example, tend to stock deeply and as a consequence have not seen as many adverse effects so far. Also, commercial turfcare machinery, has apparently fared OK until now. But due to how long this situation is continuing, with different areas of the world being hit at different times, every supply chain is now slowing down.

Again to reiterate, this is so particularly frustrating because customer demand has been so high in the early months of 2021. One commercial manufacturer estimated that demand for their products was something like 50-70% higher than would be expected for this time of the year. 

For these suppliers, filling a warehouse with stock is simply not a option it seems. Machines arrive off of the boat already pre-sold. They are in one door and out of the other.

Due to the severity and frequency of these delays, a fair point was raised, that whilst dealers of course understand that hold-ups are inevitable, there have been occasions where frustrations with dates slipping have spilled over. This, combined with dealers sometimes struggling to get through to speak to manufacturers with staff perhaps on furlough, has caused the occasional temper to fray. This has seen a few incidences of blameless office staff on the phone at manufacturers having copped an earful. It was hoped that with the acknowledgement that 'we're all in the same boat' that kindness would prevail and this sort of incident wouldn't become commonplace.

Getting to the other side of this thing successfully, requires manufacturers and dealers working together harmoniously - with honest, open and frequent communication essential.

How long will this last?

A key question that everyone is asking themselves, is how long will this increased demand last? Because it's not entirely clear why there are such high levels so far in 2021 - especially considering how last year turned out to be surprisingly buoyant for most of our sectors.

A theory, for farming and commercial customers at least, is that there is plenty of money to be spent from grants and loans distributed over the past year. There is perhaps an opportunity and a desire to reinvest these funds in new machinery for the business, rather than leave that cash in the bank. 

It's not just new machinery though where customer demand is focused, the second hand market has picked up massively also. We are being told that certain older machines are being sold way above normal values.

All great news for dealers of course, but we are told it's leaving many wondering just how long will this enthusiasm continue? Once reliable supply comes back on stream, will this pent-up demand remain? Unfortunately nobody has a crystal ball, so predicting that with any certainty is a fool's errand.

What some did suggest though, is that going forward dealers may need to think about stocking heavier, pre-season. Clearly this is easier for some dealers than others, but it was said that so far this year, it is dealers who'd stocked deep, who are finding the going the easiest.

Changes ahead

Continuing to look ahead and thinking about how ways of working may be permanently changed post-Covid, it sounded like it would be while before most of these manufacturers' staff would be back in an office full-time. Working from home for those who can, certainly sounded like it was here to stay for the foreseeable future. Some were talking about beginning to have one a day week back in with the rest of team soon - but certainly a full return is a long way off.

Also, travel for business meetings appears likely to be permanently curtailed from its pre-Covid levels in the future. We heard that whilst there is a natural Zoom-fatigue setting in, and a genuine desire for face-to-face interaction, virtual meetings have proved themselves to be efficient and successful. Like many aspects of working-life going forward, a greater blend of the online and the physical will be on the cards.

On a similar theme of people gathering once again, trade shows were also touched upon. I must say, I am sensing a genuine scepticism from some of our industry colleagues, regarding the viability of exhibitions this year - certainly ones indoors in the winter.

It's so difficult for organisers because they will be desperate to stage their event. But equally it's hard for these potential exhibitors to commit money and staff to a date that no-one can 100% guarantee in the current climate.

In the long term, I think several manufacturers we spoke to would like to see a fundamental transformation in the trade show landscape, with fewer taking place a year. In the short term for the remainder of 2021, it seems a case of putting in place plans for those still in calendar - but with the knowledge that anything could change at any time.