Supply Chain Update, Outlook Ahead of the Fall Turn Season

Oh, how easy it is to be a resident. They show up on move-in day full of promise to a brand-new (looking) housing community and a sparkling room. On their minds is a new school year, whether they’ll like their roommate and perhaps whether a pony keg will fit into the bottom rack of the refrigerator if they remove a few shelves. 

Student housing managers and their teams greet these new arrivals with warm smiles and sympathetic nods, displaying none of the stress they’ve been enduring for the past several months as they prepared for and went through turn. A stress that has recently been exacerbated by supply chain difficulties that have impacted virtually every touchpoint within a student housing community. 

“For a while there, it seemed like every other week there was something that would have been considered monumental in any other year,” explains Lisa Dillon, director of national sales at Garland, Texas-based University Furnishings, a furniture solutions provider. “Disruptions like country-wide lockdowns, raw material shortages, labor shortages, natural disasters, port congestion, warehouse or trucking scarcity and an ever-changing base of government guidelines came to be the ordinary course of business.”

These disruptions have culminated in rising prices, material shortages, shipping delays and canceled orders. Even when an item is available, there has to be enough manpower to complete the delivery or service the repair. 

“The lack of laborers is having a profound effect on the vendors we use,” says Rob Witt, group facilities manager at Denver-based Cardinal Group Management. “When I talk to vendors, they are often shorthanded or unable to find qualified personnel.  We see this regularly with the service providers that we use during turn.”

Relationships Matter

Laborers and vendors will remain an integral part of turn, regardless of what else is going on in the world. It’s one of the reasons why Julie Bonnin, principal and COO of Asset Living, prefers to maintain a strong relationship with her partners at all times. 

“Being a larger operator, our national key vendors are in constant dialogue with our national facility directors, keeping them posted on the status of our orders and advising us of a suitable replacement part if parts are in short supply or if there’s a concern the parts won’t be delivered in time,” she says. “Our national vendor partnerships have been an invaluable resource for us during these challenging supply chain issues.”

Laura Mitchell, national account manager for student housing at Lowe’s Pro Supply, notes that having the right partner can be essential when supplies aren’t readily available. It is these suppliers and service personnel that can go to bat for their clients. 

“We are working with the Lowe’s logistics team to leverage their volume and access to shipping containers and vessels for products sourced offshore,” she says. “We are also encouraging our suppliers to qualify additional freight forwarders to create more competition among transportation providers. We have been applying pressure to our suppliers with international supply lines to increase their capabilities for purchasing, as well as holding larger inventories in U.S. warehouses as a buffer to production and shipping factors outside of their control.”

Andreas Egger, sales director for student housing at commercial furniture manufacturer Foliot Furniture, is also taking a proactive approach to protecting his clients.  

“We anticipated the current situation pretty well earlier this year, and we began ordering and warehousing critical inventory like hardware, metal components and others,” he says. “Having stock availability allows us to turn current orders quickly and remain committed to the client’s desired delivery dates.”

Naturally, the onus isn’t solely on the vendors to anticipate supply chain hiccups. Student housing operators must play an active role in their own turn. This starts with placing orders substantially earlier than in years’ past.

“To mitigate these challenges, we have escalated our order placement for furniture and turn supplies earlier this year just to assure supplies are delivered in time for turn,” Bonnin says. “I recommend submitting furniture and turn orders by January 1st.  Once orders are placed, you should be verifying with the vendor on a regular basis the status of your order. Try to have all supplies on hand no later than June 1st.”

Adam Byrley, COO of The Preiss Company, also moved his furniture orders up to January from late March or early April. 

“Where we used to order turn supplies like paint, flooring, etcetera, in mid- to late May in prior years, we made those same orders as early as March,” he notes. “We had significant challenges for turn 2021 and we’re experiencing similar challenges again in 2022.”

Mitchell notes window blinds, ceiling fans and specialty paints have been particularly hard to obtain. Of course, any product can become a burden if the one you need is out of stock. That’s why Witt recommends staying attuned to global happenings, no matter how insignificant or unrelated they may appear at first. 

“It may seem alarmist to take these global situations so seriously, but it only took one winter storm in Texas to make paint virtually disappear from the shelves overnight,” he says. “We cannot afford to be lethargic in our approach to these matters. We need to pay attention to the events that are taking place in the world and be thinking about how they might affect our industry.”

Byrley has experienced this firsthand. 

“A lot of our issues in the recent past have stemmed from very specific incidents at major plants and factories that produced a specific product,” he explains. “For example, a fire at a major plant that made chlorine tabs created a huge shortage of chemicals for our property swimming pools.”

Diversification Can Help

As important as relationships are, the recent supply chain problems have taught many student housing operators that they shouldn’t rely on one channel, product or vendor for all their needs. This is particularly pertinent when those “needs” are based overseas. 

“Chinese manufacturing has been stifled as workers were prevented from going to the factories due to that country’s Zero-COVID policy,” Witt explains. “There are literally hundreds of container vessels that are sitting in Shanghai harbor that cannot be loaded at this time. All of this ultimately affects us.”

The good news, Witt notes, is that these challenges have motivated some companies to shift their manufacturing elsewhere. Like Vietnam or Mexico, for example. 

“One furniture company told me their goal is that, by 2024, nothing they sell will have to travel on the ocean,” Witt continues. “If companies decide that they don’t want all of their manufacturing eggs in one basket, that will go a long way toward helping stabilize the supply situation.”

Foliot Furniture is one company with the ability to avoid ocean travel. 

“Foliot manufactures the majority of its university furniture offerings at its own facilities in Las Vegas and Montreal,” Egger notes. “We make our own laminated boards for case goods, while all of our upholstery and mattresses are produced in the U.S. or Canada. This allows us to avoid and overcome a lot of the current Asia supply chain issues faced by so many. Our summer and fall delivery commitments have not been an issue to date, nor are they forecasted to be an issue.”

Chase Minnifield, president of Lexington, Kentucky-based EZ Turn, a software that helps property managers manage their staff, vendors and tenants, thinks a local approach can also ease some of the supply chain constraints.

“Order locally,” he says. “It will keep you from using many overseas manufacturers. Instead, use local or big box manufacturers that distribute locally.” 

Unfortunately, overcoming the overseas issue doesn’t ensure a problem-free turn. Student housing operators still have to deal with incidents at factories, as well as the labor shortage stateside. 

“Trucking is another issue that has gotten worse over the past year,” Witt adds. “There is a significant shortage of long-haul truckers. It is so bad Walmart will pay their employees to go to trucking school, then employ them as drivers, paying $90,000-plus. The lack of truckers has meant that shipping containers are piling up in U.S. ports. Your products may be in the country, but you still might not see them for a long while.”

When to Pivot

Minnifield believes the supply chain problems are so severe that ordering ahead may not be enough.

“With customers coast to coast, the main feedback we are receiving universally is that delayed shipping is causing our users to complete their inspections earlier,” he says. “They are then using the data from their inspections to order everything earlier than usual.”

The biggest problem with this, Minnifield notes, is the impact on budgets.

“This affects sites that have monthly budgets because they’ll need more funding months earlier to carry out these inspections and orders,” he continues. 

Byrley has dealt with this, along with the price increases across the board, by rethinking the way he and his team write their budgets, particularly for turn and maintenance. He says these rising costs often mean cutting costs elsewhere, such as marketing and administration, to make things pencil.

Even when student housing operators can successfully complete these early orders, they must then find a place to store the items ahead of turn.

“We are really encouraging our properties to pre-order a few appliances to be always kept in inventory to assure we have appliances on-hand when an appliance goes out in a unit,” Bonnin says. “We would rather rent out a storage unit to store supplies early, versus scramble to find the necessary supplies in May and June.”

Witt recommends keeping a running stock list that is updated in real time to avoid any unnecessary surprises, both throughout the year and at turn.

“A day-to-day inventory of parts, etcetera, should be maintained,” he suggests. “Replace parts as you use them, rather than waiting until you’re almost out. Be as organized as possible. Think through as many scenarios as you can. Think creatively. If it looks like something that you need will not make it on time, what are the alternatives? Repair? Move items from vacant spaces? Purchase a different item? You’ve got to have good storage and use it well.”

Egger notes that operators should not only call to confirm that their suppliers have stateside inventory, but they may want to think about paring down their orders as well.

“In order to increase efficiencies, consolidate your portfolio’s furniture needs to as few different styles and looks as possible,” he says. 

When that’s not possible, be prepared to pivot and go to Plan B, C or even G. 

“Be open to product and feature substitutions,” Mitchell adds. “This will help soften delays and backorders.”

Above all, it’s important to take a step back, take a breath and gain some perspective, knowing everyone is doing the best they can under tough circumstances.

“Our commitment to clients is to provide best-in-class furnishings that enhance the value of their property and the quality of life of their residents — on time and on budget,” Dillon says. “We’re turning over every rock to find efficiencies, time savings, backup plans, redundancies and workarounds so we can look at ourselves in the mirror and know we did everything humanly possible to deliver on that commitment.”

And always remember, the most important relationship you have is the one with your students. 

“A bad turn can wreak havoc on your property for multiple years” Byrley says. “So getting turn completed smoothly and effectively for incoming residents is the most important thing a property manager can do all year long.” 

Nellie Day

This article was originally published in the May/June 2022 issue of Student Housing Business magazine. To subscribe, please click here