Posted On: September 19, 2023
Just a few weeks ago my family and I noticed that the upcoming Saturday would be perfect weather to grill hamburgers in our backyard with some friends. With a little more than five days to prepare my list was simple; make sure the grill works, purchase the hamburgers, and buy all the condiments. As per usual, I waited until the day before to make my grocery run to pick everything up and I was fortunate to find all the items I needed were in stock. The last step, turning on the grill, happened the day of our gathering and as I expected the grill fired up with no problems. My home does not have an outdoor gas connection, so I use a propane grill and have become very accustomed to always having two tanks. Unfortunately, on this occasion I did not have a spare and since I waited until the last minute to check if my grill was working, I decided to go ahead without a backup and start our gathering on time.
Our guests arrived shortly after I got the grill going and the burgers were seasoned and ready to start cooking. After a few minutes with my hamburgers on the grill I suddenly lost the flame on the grill and the reality of the situation set in; I was out of propane. I had checked off everything on my list but made the incorrect assumption that my propane, the most critical component, would be enough to get me through this cookout. It wasn’t the first time I’ve run out of propane, but it was the first time I didn’t have a backup tank and it was the first time I’ve had this happen in the middle of hosting guests. Panic set in and I made the dreaded walk into the house to explain to my boss (my wife) and our guests that I would have to leave and go purchase another tank.
Running your HVAC distributer business is much more complicated than hosting family and friends for a cookout but my experience does teach a valuable lesson to us all: we can’t make assumptions that critical components are just “going to be fine”. In the business of selling HVAC products and especially through so many global supply chain issues these past few years we can become hyper focused on the bigticket items but forget those smaller components that are needed when something goes wrong. I’ve seen the faces of many customers when they walk into a HVAC distributer branch desperately needing that critical part to get a family cooling or heating only to be told the part is not in stock. The only feeling worse than telling a customer the part is not on your shelf is when you realize the customer is going to go to the competitor to get the part you don’t have.
The world we live in is very fluid and we need to keep our eye on what is happening and the impacts this will have on our industry and the repair opportunity. Critical components from suppliers have moved from a lead time of just a few weeks to in some cases 50+ weeks. Costs from suppliers of these critical components have soared with multiple prices increases each year driving up the costs of finished goods and replacement parts. On the consumer side of things, a recently released report by the University of Michigan found that consumer sentiment reached a new low of 50.2 in May. This has not been seen since the recession of the early 1980’s. Just how dramatic is this shift in consumer sentiment? This is a 35-point drop since this time last year. To say it a little more directly, consumers have almost half the confidence they had last year and the dollar they have today is not going as far as the dollar they had last year.
I do not bring these things up to suggest economic doom is coming and we should all go hide under a rock. Rather, I bring these things up to remind all of us that the decision to replace older HVAC equipment today may shift to more repairs if consumers continue to battle higher costs of consumer goods and their discretionary spending tightens. Right now, it may seem like whoever has the equipment wins the contractor, but we can’t underestimate the repair market opportunity that may continue to expand.
Remember my grilling experience? I had the grill, burgers, condiments and a flame when I started but I did not check to make sure I had enough propane, and I knew I was playing with fire when I didn’t have a backup tank. I assumed that everything would be okay and when it wasn’t, I was scrambling to take care of my guests who were waiting. To avoid having a panic moment of your own with repair parts, allow me to make three suggestions that will help you make sure your shelves are stocked with the correct parts you need to meet repair market demand.
Suggestion 1: Evaluate the critical components you currently have in stock and find the holes in your inventory that need to be addressed. There are certain components that are critical to the performance of HVAC equipment and some parts that are required for proper warranty credits. Make sure that if you have areas where you are too light that you address those products immediately.
Suggestion 2: Engage with your Allied Air sales representative when you are evaluating your parts needs. Your representative can provide you with critical data related to your purchase history of finished goods and parts for those products that will help you make the best purchasing decisions.
Suggestion 3: The third step is probably the easiest step to take but may require a paradigm shift; place your purchase orders for these parts well in advance of an upcoming season. It may be necessary to look even further out to the future than in year’s past and place those parts orders with suppliers to make sure you get your product before that first sweltering heat wave or frigid arctic blast. The goals any HVAC distributor set for themselves are probably said different but center around the same three things: take care of existing customers, minimize the attrition of business to competitors, and bring new customers to the business. Having the repair parts needed to support contractors will be an important part to continuing your world-class customer experience during these interesting times we are living in.