MRF Operations Forum 2022: Suppliers weigh in on supply chain issues

Equipment suppliers to the recycling industry weighed in on the effects of inflation and supply chain disruptions during a MRF Operations Forum panel Oct. 18 in Chicago.

The discussion was moderated by Nat Egosi of RRT Design & Construction, Melville, New York, who partners with Recycling Today to develop programming for the event.

The panelists included D.J. Van Deusen, president of Harris, Cordele, Georgia; Chris Ulum, managing director of National Recovery Technologies LLC (NRT), Nashville, Tennessee; Pieter Eenkema Van Dijk, president of Van Dyk Recycling Solutions, Norwalk, Connecticut; Chris Hawn, CEO of Machinex Technologies Inc., High Point, North Carolina; and Mat Everhart, CEO of Stadler America LLC, Colfax, North Carolina.

Inflation and supply chain disruptions have complicated suppliers’ abilities to quote firm prices and delivery times, the panelists said.

Van Deusen said Harris, which manufactures balers, has a policy honoring the quoted price regardless of the delivery date. “And what that requires is a lot of advanced planning in terms of the supply chain and being able to, in some ways, naturally hedge against that by having material availability,” he said.

“And then, secondly, it's being able to be clear on what that production and delivery slot is to set an expectation at the time we're quoting it,” Van Deusen continued. “Some of it is competition among the quotes that are out there. [The] next delivery slot up is June of next year; that's the best that's going to be, and the first one in gets it. And if you call tomorrow, it might be July.”

He added, “We don't like being in that position, but we can't make an infinite number of machines in a given month, so that's the basic approach today.”

Hawn of Machinex, which supplies sorting systems, optical sorters, robots and balers, said that what customers used to believe was a sales tactic—get your order in now to get the best deal and delivery date—is reality today.

Given the supply chain issues, he said, the quotes Machinex makes are valid for a specified time with the understanding that some bids require a longer time window.

Today’s issues that affect a manufacturer’s ability to meet delivery dates also make transparency and communication with customers priorities at Machinex, Hawn said. “Managing it with the customer, talking about it openly in the beginning, it's a road to success.”

Stadler's Everhart agreed. “You absolutely have to communicate early and often in the process” about the situation and how the company is working to address it, he said.

Stadler is a system integrator and a manufacturer of ballistic separators and trommel screens uses in MRFs.

Regarding raw materials, Everhart said Stadler tries to maintain ample stock in inventory. Once those stocks are nearing depletion, Stadler uses an index to determine the price of future lots and updates its potential customers accordingly.

“The component side of it is more critical because we can't control people who don't work for us,” Everhart said. “We get lead times on things like motor gearboxes, electrical components, VFDs [variable frequency drives]—raise your hand if you've not had a VFD delivered on time this year. We have to communicate the situation. … We have to make sure customers know we're just not winging it. You just really have to put the cards out there and say, This is what I'm trying to do to earn your business. This is what I'm trying to do to serve you as my potential customer. These are the things I can't control. And this is how I'm going to try to capsulate your risk.”

Van Dijk says his company’s approach to quoting delivery dates varies by customer. For those customers who have a history of ordering quickly after a quote, he said the company provides the delivery date in the quote. “If we are uncertain [about the order], we don’t give the delivery date.”

To address variability in component and material availability, Ulum said the quotes NRT makes are good for a limited time, with the company taking a first-order-in-first-machine-out approach.

“Being closely coupled with our supply chain and having people responsible for supply chain management means that we're able to stay on top of our costed bill of materials and ensure that that's reflected up to date and in any of our quotes.”

Van Dijk said he does not foresee supply chain issues and inflation improving in the fourth quarter or even next year. “Steel prices are coming down, but we see components are not coming down.”

Van Dyk Recycling Systems is a system integration and a distributor for manufacturers that include Bollegraaf and Tomra.

NRT's Ulum agreed, saying, “We don't see a big change in the next quarter, either. This supply chain situation we're in is not moving week to week, month to month, quarter to quarter. It is a year-to-year kind of issue that we're trying to work our way out of.”

He added that NRT, which manufactures optical sorting technology, and its parent company, Bulk Handling Systems, Eugene, Oregon, have been working with some of their supply chain players for many decades, and proactive communication that includes forecasting demand in real-time is essential. “We've also had to take inventory positions that we wouldn't normally do. We've had to look at not only risk buys but also risk builds in order to sort of offset and hedge against the risks that are built into the supply chain.”

Regarding the issues that keep the panelists up at night, Van Deusen said they are on the production side of the business, with labor being the biggest issue.

Ulum indicated hiring talented personnel in the manufacturing and service sides of the business is a concern. “Finding, securing, training and retaining talent would be the biggest thing that would keep me up at night.”

But that same shortage of labor also is a benefit for the companies on the panel. “That's great in terms of driving demand for automation,” Ulum said. “That's one of the many tailwinds to this industry.”

Van Dijk said obtaining parts for manufacturing is his No. 1 worry, followed by hiring and retaining service personnel.  

Obtaining personnel and spare parts also were concerns for Everhart. He said he is continually reviewing Stadler’s parts inventory and encouraging the company’s customers to maintain their own parts inventories.