A Manufacturer’s Perspective: An Interview with Jeffrey Schad

The future of distribution, manufacturing, and the impact on products and end users is unknown. Many in the industry have voiced concerns over how large players will move forward from the current challenges experienced by the hose sector as a result of the ongoing pandemic and global crises. Hose + Coupling World had the privilege of speaking with Jeffrey Schad, CEO of Snap-tite Hose, to discuss his outlook on the future of hose manufacturing.

By Sara Mathov and Angelica Pajkovic

A Look at the Supply Chain

Jeffrey Schad, Chief Executive Officer of the manufacturing company Snap-tite Hose.

Jeffrey Schad, Chief Executive Officer of the manufacturing company Snap-tite Hose, has had a wide variety of experience in the hose industry. His pervious role as Chief Financial Officer provided him with a unique perspective on the dynamic workings of the industrial supply chain, which he has carried into his current position. “It has been a very interesting time to be a CEO, to say the least,” explained Schad. “The pandemic, and more recently, the ongoing crises around the world, has had a significant impact on most manufacturers and brought to light how fragile the supply chain really is.”

Facing Challenges

Regarding the hose industry, supply chain challenges can be broken into three distinct areas of impact, explained Schad. The first difficulty stems from the fabrication of the materials of construction. “If the required materials are made overseas, it becomes difficult to ensure that they will arrive on time. We use nylon and polyester yarn in our hoses, and there are no yarn manufacturers in North America. We must therefore import all yarn,” said Schad. “Although we have been lucky, and not had many issues with yarn, if it is late or is not available, it can significantly delay production and impact our dealer’s ability to deliver to the end user. There is no guaranteed delivery date, and that puts a real stress on some of our customers, especially in our municipal markets.”

The second difficulty stems from issues with locally sourced materials. “When a single plant is responsible for the production of a key raw material, disruptions to the market can be very problematic. For example, our supply of a base chemical component of polyurethane was provided by one plant. When it was acquired and then promptly shut down, it left us without a reliable source for that material,” he continued. “The other issue with having a single local supplier of a particular chemical, is that if someone intervenes, say a military order, the product may not be available to us. It can cause a lot of stress and uncertainty about whether we will be able to satisfy our production needs.”

The third challenge, Schad said, is lack of people. “While there are multiple causes for a shortage of workers, the pandemic has led to a significant decrease in individuals interested in working in manufacturing and industrial. With a fair number of small manufacturers in our area, we have noticed that everyone is having a hard time finding interested and qualified personnel. Our staffing is not where we want it to be, as there are simply not enough people in the factory-based industry.”

To address supply chain challenges Schad explained that many companies are taking several steps to broaden their network of suppliers. To mitigate the potential negative consequences of staff shortages, specifically, several manufacturers have renewed efforts to elevate workplace conditions. “Hose manufacturers are essential to several industries across the board. It may not seem like it to some, but hoses are a highly necessary component, and must meet the required specifications,” stated Schad. “There is so much to be done to produce them; somebody must operate the looms, somebody has to operate the extruders, and it is people who assemble the finished hoses to ensure that they are safe and up to certain standards per the industry we are producing them for. Our employees are the most important part of the operation.”

Future of Distributing and Manufacturing

Looking to the future, Schad believes that the market will remain somewhat unpredictable and the industry will experience some pivotal moments. “The ongoing pandemic and supply shortages have made it difficult for companies to meet the demand, meaning that there is more to consider then just the labor rate. A manufacturer’s business model of producing 10,000 feet of hose every day, to make it low cost, as was common prior to COVID-19, is not necessarily feasible any longer,” said Schad. “This means that the industrial customers who want a high quality slightly customized 10,000 feet, may no longer be able to get it in the timely manner they are used to. Diversifying and networking with other suppliers will therefore be the most valuable and efficient way to mitigate the impact of supply chain shortages.”

Another way to mitigate the impact is to recognize that the biggest difference between manufacturing and distributing, and choosing someone like Amazon, is the value proposition. “What distributors do is provide value. This used to be in the form of stock, but now it is access to the customers, and a range of associated products,” explained Schad.

“Customers often do not know what they really need, and even if some type of AI is provided to help, it is not the same as a person on the phone. Distributors have an advantage over this (Amazon) because they can explain products and important considerations, and they can even do repairs. They are value-added services, and Amazon could get there, but only if they do exactly what a distributor is doing.”

Adding warehouses and reducing transport time is a third step Schad believes the industry will begin to adopt. “This progression could get complicated if Amazon takes that same step, but I believe that the distributors insight and experience are really what make the difference.”

Final Thoughts

When asked if he had any final thoughts on the industry overall, Schad encouraged distributors and users to really think about the performance of what they are buying. “Buying a hose” is a value proposition, it is not just a price. What value can you get for the money you spend? I would argue that a better hose will last longer, so if you want to use it over a long-time frame, you should buy a better hose. Sometimes it is upfront investment, but it is higher value in the long run. Many times, it does not work this way in procurement methodology as many municipalities focus on budget only, and do not want to spend more. Believe it or not, many of our competitors do not agree with this higher-value philosophy, they focus on reducing price (by providing bare minimum hose specifications), and I do not believe this is the best direction to take,” he concluded. “Reduction of materials, processes, and certifications not only makes the hose a lower quality, but can cause a catastrophic failure in the wrong environment. Our competitors may try to beat us with, but our quality, processes, and our people make the real difference. We manufacture hoses like lives depend on them. Because often times, they do.”

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