Supply chains are sprinting at full tilt to keep personal protective equipment (PPE) crucial to the safety of frontline workers in stock, but medical supply distributors aren't the only ones in the fight. Industrial distributors like W.W. Grainger, Fastenal, MSC Industrial and dozens more distribute face masks, work gloves, face shields, safety glasses, janitorial supplies and more to construction sites, manufacturing plants and other workplaces.
Healthcare settings were a minor part of their book of business prior to the pandemic. For many of these companies, PPE items didn't represent a majority of sales until a few months ago when they were pulled into the fight against coronavirus. Today, the challenge for industrial suppliers is keeping essential products in stock, since for those relevant to COVID-19 mitigation, demand is virtually limitless.
"We literally took orders for decades worth of product in a few days in some cases," said Grainger CEO Donald Macpherson on an April earnings call.
In January, Grainger convened a dedicated task force for emergency preparedness, initially focused on keeping products in stock amid the manufacturing closures in China.
"We executed large pre-buys of non-pandemic product … to ensure we could supply our customers through this period," said Macpherson. As the impact of the virus grew, Grainger's task force expanded to planning business continuity as CDC and other health authority guidelines changed.
"We've had to make some tough choices about prioritization and the challenge will continue into the near future."
W. W. Grainger CEO
Fastenal's China team also alerted the company of the pandemic threat in January.
"At that point in time, we started to lock down and monitor specific SKUs," said CEO Dan Florness on an April earnings call. Executives notified the entire Fastenal team of the potential disruptions coming Feb. 6 and started vetting new suppliers to add depth to the bench for critical products.
Fastenal touted its team of 200 sourcing professionals on the ground in China for bolstering the company's in-stock status.
"I think these ... folks in product and international procurement deserve a lot of credit for continuing to keep our supply chain of PPE product pretty filled," said Fastenal CFO Holden Lewis.
MSC Industrial CEO Erik Gershwind said successful procurement amid unceasing demand comes down to supplier relationships, on an early April earnings call. "I do think we've developed a lot of relationships over the years, have a lot of good sourcing capabilities and it's given us access to tap into sources that maybe others can't," said the CEO
With outsized demand for a minority of their products, these vendors are attempting to triage demand based on need, bringing healthcare providers, first responders and government agencies to the front of the queue.
"We've had to make some tough choices about prioritization and the challenge will continue into the near future, " Grainger's Macpherson explained. Fastenal began to restrict shipments of janitorial and safety SKUs to healthcare customers only near the end of March.
The quarter in progress now will show the true impact of the coronavirus pandemic on some essential suppliers since much of their core customer base — manufacturing, automotive, some retail and construction among others — is considered less essential in many jurisdictions. Sales for some SKUs may be booming, but total inventories are generally down thanks to shutdowns affecting the industrial economy.