All the Moving Pieces

While efficiency is good, it is possible to build a thing (or a system) and have it be too efficient. The tradeoffs for efficiency are redundancy and capacity. You might not really need that second boiler, but when the first boiler stops working you’re very glad to have it.

That’s kind of the situation the world is facing now with the global supply chain. We built the most efficient supply chain possible because even a tiny efficiency in the making or the getting of a widget means serious money when you multiply it by a couple million widgets.

But then the pandemic hit, and suddenly millions upon millions of people were stuck at home ordering stuff online. Spending shifted from services (like restaurants or travel) to durable goods. Demand for just about everything skyrocketed, and, even though it seems to have come down a bit, consumer demand remains very high.

(I hope some academics out there are studying why that demand has persisted the way it has, even as the country opens up again. Maybe consumer spending habits have seen a lasting shift? Maybe it has something to do with the anxious times we’re living in? When there’s so much news of war and upheaval, do people take comfort in buying stuff?)

That demand pushed the global supply chain, not to the breaking point, but certainly to the point of disfunction, with price spikes, delays and all manner of shortages. And with it has come inflation at a rate not seen in 40 years.

All of that taken into consideration, I find it remarkable—and heartening—how all three companies profiled in our 2022 Book of Giants have adapted and even thrived over the past year. After all, the larger a mechanical contractor is, the larger the scope of its work, the more different types of work it takes on, the more sensitive (you would think) it becomes to supply chain disruptions.

All three have turned to technology to manage their own materials and workflows. C. J. Erickson has invested in both its estimating software as well as its internal communication. McKinstry has implemented a new shop management platform to handle the day-to-day flow of orders. Southland Industries has leaned into its strength in system design to offer flexible solutions based around product availability.

And, notably, all three companies have invested in their relationships across the board: negotiating with suppliers, managing expectations with customers, and making sure all the company workers know what the game plan is and how it’s supposed to be executed.

Those worker relationships have usually proven to be the most important of all. As our Giants—and contacting companies of all sizes—have maneuvered the post-pandemic environment, giving employees greater flexibility and better work-life balance have been important factors in building and maintaining a high-performing team.

These past few years, it seems like it’s been one crisis on top of another, with never a moment for a business owner to catch their breath. At the same time, it’s been an opportunity for companies to reexamine their core business assumptions, to reinvest in their people and their technology, to find for themselves that right balance between efficiency and redundancy.

As Matt Erickson, CEO of C. J. Erickson Plumbing Co., said, “We learned with each new wave and circumstance, and are confident that we can easily deal with anything new that COVID throws at us.”