Sharp focus on the supply chain.

14. September 2021

Demand became fierce as we entered the fourth quarter. Everyone was screaming at pieces and, there was extensive pressure on the market in almost all areas.

At Hydrema, the purchasing department has had dialogue and follow-up at the centre through the corona crisis.

The boom in the construction industry during the corona crisis has been good for the industry in many ways, but the positive pace has also created new challenges. Not so much with the contractors, but rather in the next stage with suppliers of materials and machines.

These challenges have been - and still are - close to the life of the largest Danish manufacturer of construction machinery, Hydrema, with headquarters in Støvring, Denmark.

Demand became fierce as we entered the fourth quarter. Everyone was screaming at pieces and, there was extensive pressure on the market in almost all areas.

Group Purchasing Manager, Marianne Frank Mogensen

- I think we have spent about 80 per cent of our time the last 18 months on follow-up and calling around to chase and locate pieces for our production of dump trucks in Germany as well as for excavators and backhoes in Denmark. It has become a demanding task, which to that extent keeps us on our toes, says Group Purchasing Manager Marianne Frank Mogensen, Hydrema.

Has been running

However, Hydrema is far from one of those companies that have been hit the hardest by non-delivery.

- Our supply chain has functioned fairly well in relation to many of our competitors. We consistently forecast a year and a half into the future. This has meant that many of our suppliers have been prepared for what we would come and buy. This is not to say that we are over the problems - far from it. But because we build our store on long-term loyal supplier relationships, we have had a little more understanding and support than others might experience in these times. So with mutual help, it seems that we can pretty much make things stick together - even if the challenges are not over, she says.

Freight prices skyrocket

But that there have been problems is indisputable. Especially when the summer of 2020 ended, things started to tighten.

- Demand became fierce as we entered the fourth quarter. Everyone was screaming at pieces and there was extensive pressure on the market, in almost all areas. During that period, the prices of raw materials rose significantly, while shipping became more difficult and expensive, says Marianne Frank Morgensen and adds that where the shipping price of a container from Asia before the crisis was 950 US dollars, it has now risen to approx. 6,000 US dollars.

Group Purchasing Manager Marianne Frank Mogensen. Photo: Hydrema.

Lack of manpower

Although it has been a daily battle for a long time, and still is in many areas, the group purchasing manager believes that it is a little brighter on the horizon.

- We expect steel prices to fall a lot soon. In addition, many of our subcontractors have gradually gotten the system up and running and got their suppliers involved as well, she says.

On the other hand, a new problem lurks that we already know about in Denmark. Namely, labour shortages.

- Everyone is short of labour, especially in Central Europe. The lack of manpower is a bigger problem than missing materials, and that is probably the biggest problem right now, says Marianne Frank Mogensen.

Dialogue and follow-up

When we're back to normal? She does not dare to predict. But at the same time, she is quite convinced that both Hydrema and the manufacturer's main suppliers have learned to handle the changing everyday life of the crisis. Among other things, through a solid reconciliation of expectations with the partners.

- Here, the previously mentioned forecast is extremely important. In any case, the crisis has taught us that dialogue and follow-up are very important if you want to avoid the worst challenges, she tells Maskinteknik.

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