A message from David Meeks, SVP Supply Chain
CBS Team Members,
I hope this message finds you well. I want to update you on the recent disruptions in the global supply chain and how it has affected CBS. As we all know, the year 2022 was a year of unprecedented supply chain disruptions, which affected CBS as well. This resulted in a shortage of products and longer lead times, which ranged from 30 days to a staggering 6-12 months in some cases. The ocean freight transit times also rose, climbing from 40 days to over 80 days, and rationing batteries became a daily routine for us.
However, by August 2022, the situation improved, with lead times dropping dramatically, and as
a result, our inventory levels soared to an unhealthy level, growing by over $60 million in a few short months. This strain on our working capital investment was not unique to CBS, as many of our competitors and suppliers faced the same challenge.
In September, I joined forces with the senior leadership team to take swift action and correct the rising inventory levels. We rebalanced our inventory network, placing new purchase orders, and reduced dead and slow-moving inventory through a coordinated effort from our sales and branch teams. These efforts led to a reduction of nearly $40 million in inventory, and we expect to reduce it by another $17 million over the next 3 months, with a continued focus on excess and slow-moving product while closely monitoring service levels.
It is important to note that, despite record inventory levels, we faced both inventory shortages and
a lack of storage space. This highlights the need for improvement in our supply network, which needs work to align DCs, hubs, and branches, ensuring timely and efficient product delivery from our suppliers to customers. Our processes and tools (e.g., we have a lot of heavy lifting remaining to complete the migration from P21 to NS) for planning and purchasing also need improvement.
The months ahead will be challenging, but I have no doubt that with the talented team we have at CBS, we will redefine the industry and set a standard for all to follow. Our mission as a supply chain team is to ensure that products are in the right place at the right time, providing the best possible service to our customers and adding value to our shareholders.
Finally, I want to ask a question that we should always keep in mind: “If our internal customers had a choice, would they choose us?”
Thank you for your hard work and dedication.
Take care,
David
P.S. I would like to introduce the Supply Chain Leadership team, which includes: