Q&A: CRP’s supply chain manager voices optimism over risk-based management

Cranbury, New Jersey -- Nine years after Germany’s defeat in World War II, Conti Rubber Products, an American importer, began sourcing tires from the reviving nation. Decades later, it rebranded itself CRP Industries as its categories spread into hoses, gaskets, and chemicals. CRP now maintains its niche in global supply management. Distributing European and Asian brands like Ajusa, ContiTech, Rein, and Pentosin throughout North America requires rigorous quality control standards. Nowadays, as proven by the world pandemic, few companies can ignore international supply chain disruptions. But long before this crisis, management implemented a process approach with risk-based thinking and deployed the “Plan-Do-Check-Act” cycle at all organizational levels. Juergen Schlueter, director of supply chain management, analyzes the pitfalls and benefits of handling goods across the Atlantic and Pacific oceans.  

(This Q&A has been shortened for clarity.) 

As of Labor Day, delays, shortages and rising costs continue to bedevil the industry; what are you seeing? 

The delays, shortages, and rising costs we are experiencing had already started to plague the industry much earlier this year. What we now see is a steady increase in logistics costs, particularly international transportation. Raw material cost increases are occurring frequently enough to drive up procurement costs. In combination with the labor shortage in distribution and light manufacturing, this has created a perfect storm, dramatically impacting our industry. One of the few mitigations has been that with a heightened awareness of the supply chain's cause-and-effect relationships, an early increase of inventory safety stock levels is helping to keep customers satisfied. 

What lessons in the ripple effects in the disruption is CRP Industries taking away? 

One of the takeaways is the importance of a smooth-running supply chain— just like oxygen. If you have it, you do not worry. If you lack it, it’s all you think about. The subject of business sustainability is front-and-center of making certain the unavoidable price increases are communicated and quickly acted upon.  CRP values the importance of collaborative communication with our supply partners to mitigate customer impacts. 

What is your take on how long the bottlenecks will last and how much they will impact inflation? 

There are numerous bottlenecks currently in play like lack of labor resources, raw material shortages on various levels, transportation delays, and the impact of the continued COVID-19 situation. Any one of these drivers can further impact costs. The question is how much and the opportunity to reduce future prices. The labor situation should improve as soon as the workforce becomes more comfortable with the status of the pandemic being controlled.  Raw material supply should improve by early 2022, although some suppliers may hold on to their high pricing. International transportation costs should come down by late Q1 of 2022. Although to what levels is questionable, as carriers are currently enjoying profits, which they have not had in years. 

Also, look at the logistic cost-drivers.  It’s not just the carriers’ “supply and demand” pricing that impacts the industry; it’s all the “related activities” that add up within the chain. Having an almost non-existent vessel schedule reliability does not help. That creates bottlenecks at the seaport terminals. A fallout from this situation is the generation of extraordinary demurrage and per diem charges. That’s revenue for the carriers and port operators. And the costs are passed onto the consumers.  

What are your stakeholders' most significant concerns? 

Our stakeholders' concerns are aligned with our “Customer First” initiative. We are positioning an adequate inventory at the right time to meet the market needs and to accomplish this without incurring significant supply chain costs.  We remain focused on the sustainability of our business and aim to provide solutions to the professional repair technician services segment. 

Supply chain snarls aside, what trends excite you the most? 

Although not great for the OE Manufacturers, new car production delays and the related low inventory at the dealerships with the increased pricing for used vehicles should bode well for the automotive aftermarket. People are keeping their cars longer, which will need repair. Similar to 2009, 2022 could be another banner year for the automotive aftermarket.