Supply chain issues that have plagued the industry have not been a problem for AAA Distributor, a Philadelphia-based home improvement store that distributes kitchen cabinetry, shower doors, vanities and flooring products from its 120,000-sq.-ft. warehouse.
The demand for home improvement projects is everywhere, but the products are simply not available in most stores and supply houses. Manufacturers are discontinuing less popular products. Ships wait off the California coast, unable to dock to unload their cargo. Truck drivers are overwhelmed, often confronting long wait times. Railyards are clogged, with trains backed up for miles outside key ports and distribution facilities.
The commercial supply chain that each year brings more than $1 trillion of consumer goods from Asia is clogged. No one knows how to overcome this supply chain issue. The unfortunate result is a rapid increase in prices across all industries and product categories along with shortages of products.
Unfortunately, many retailers are faced with a new issue, a broken supply chain and no access to products. With increased tariffs, and COVID shutdowns some retailers have reduced their operations. This is not the case for AAA Distributor, which has products in stock and ready to ship.
The company made the difficult decision to place precautionary orders to avoid running out of goods during the COVID crisis. Later, it struggled to find containers to haul the goods.
Luckily, the pre-orders paid off. AAA Distributor started to receive containers in early 2021 and accumulated more than two times the inventory that was brought to the United States the prior year. This in-stock inventory arrived just in time for the increased demand for the summer home improvement season.
At a typical kitchen and bath store, it is not unusual to wait for kitchen cabinets or vanities for six to eight weeks. Before 2020, if a distributor told a customer that it would take more than six weeks to get kitchen cabinets, they would have walked out the door of our showroom, according to a AAA spokesperson. But in the current supply chain crisis, customers are excited just to be able to order products and want to leave a deposit to lock in the price.
AAA Distributor is able to ship all the kitchen and bath products within 48 hours. The company also launched a new website where all the products could be purchased and shipped directly to customers’ job sites.
What caused the supply chain breakdown?
In addition to the COVID restrictions shuttering factories and preventing supplies of raw materials, today the main issue is with what used to be low-cost and readily available — shipping containers. Two years ago, a container cost less than $3,500 to transport goods from Asia to the U.S. Today, the service fetches as much as $27,000. It is no longer about the price but about just having the ability to book a container.
Costco, Amazon and UPS have leased shipping containers, and AAA Distributor has secured its supply lines to maintain its high inventory levels.
