A whole new set of challenges

I think it’s fair to say that the market has bounced back much more strongly than anyone in the industry could have hoped. While it’s brilliant news that we should all be celebrating, I think we all know that it has actually thrown up a whole new set of challenges – with demand in some areas starting to outstrip supply.

As an industry, and certainly at Mila, we all worked incredibly hard during and after lockdown to try and accurately predict what the market would look like when we could eventually get back to work. Even the most optimistic forecasts from some of our fabricators though have so far proved to be underestimates.

We had expected demand to start at around 60% of normal, rising gradually over 3 months to something like 90-95% and we factored our stock levels accordingly. By contrast, what we’ve actually seen is demand already running at more than 100% of last year’s order levels, and several of our biggest customers reporting record week after record week.

The green grant scheme, which the government announced last week, might have inadvertently thrown a real spanner in the works by not actually starting until September, but we need to wait to see more detail of that before we can judge the impact – both positive and negative.

As a business which proudly sets the benchmark in the hardware industry for service and delivery, with OTIF in normal times routinely at 98.5% and above, we are currently dipping to around 95%. This is still good, and certainly still ahead of many of our competitors, but it is not where we want to be. That’s why we’re already making significant investments in airfreight to get the goods that our customers tell us they need into our warehouse as quickly as possible.

We’re working hand in hand with fabricators to make sure we don’t let them down and keeping them informed every step of the way. I know from the feedback we’ve already had that communication is absolutely critical for their own planning.

However, I need to reassure all our customers that we are carefully monitoring buying patterns as well demand. Just as we did at the start of the year when Coronavirus first impacted on our suppliers in China and restricted the supply of some products, we are working hard to ensure that loyal Mila customers have priority access to the products that they need and that we avoid any unnecessary shortages for everyone. As well as the airfreighted goods, we have lots of additional stock on its way to us by sea which will be with us within weeks.

Thanks

Richard

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