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6 Tips for Contractors Navigating a Material Shortage

A man wearing a hard hat while using tablet and working in factory.

June 30, 2021

As the world begins to emerge from the pandemic, its effects are still being widely felt. For nearly all contractors, a stalled supply chain is creating big challenges. From lumber to steel to copper, many of the most-used supplies are significantly delayed or completely unavailable. 

This has led to sourcing issues, stalled projects and price increases, which have resulted in lost contracts and busted budgets for home renovation projects. Navigating through these uncertain times won’t be easy, but some preparation and flexibility can help contractors weather this storm.

Get proactive about purchasing

With materials taking longer to be sourced and shipped, one of the most reliable ways to overcome this hurdle is to get ahead of it. Contractors and providers need to allow more lead time for projects and get material orders in as soon as possible.

That’s especially true for any projects relying on large amounts of lumber, which is facing significant price fluctuations in addition to being the most delayed material (according to the U.S. Chamber of Commerce Commercial Construction Index). It always pays to be prepared, but with current delays, contractors' best chance at staying on schedule and budget is to get those orders placed yesterday. By working closely with customers to make decisions on materials as early as possible, contractors can submit orders promptly.

Keep the lines of communication open

With so much uncertainty in the supply chain, it’s essential for contractors to stay in close contact with their suppliers. Remaining in touch with your material partners will both keep you apprised of any changes in availability and enable you to relay that important information to your customers. (Everyone appreciates good communication!) A volatile market means things will change quickly and keeping those phone numbers at hand will allow you to move quickly and effectively.

Expand your network

We all have our go-tos — those reliable resources who always come through for us no matter the project. Unfortunately, as the supply chain challenges persist, even the most dependable of partners are likely being affected. To mitigate the impact, reach out to lesser-known suppliers in the industry. You may not have a relationship with these vendors yet, but by laying the groundwork and creating connections now, you’ll increase your current resources and expand your options even after the shortage is resolved.

Be a resource

With prices and timelines as unpredictable as they are, you want to be a steady partner to both the homeowners and other service providers (plumbers, HVAC technicians, electricians, etc.) you work with. This means offering financing options to allow customers the flexibility they need without delaying their payment to you. Ally Lending loans for repairs and renovations can deliver on both by giving your customers the option to pay over time, while you get paid up front. By providing your customers customized financing options, they’ll have the access to capital they need while enduring material cost fluctuations.

Stay flexible

As the supply chain challenges continue, providers and contractors will have to allow for flexibility not only in their timelines, but in the materials they use and offer to homeowners. For example, instead of plywood, a project could use oriented strand board (OSB). Be willing to substitute materials and present as many alternative products as possible for your customers to choose from. They’ll appreciate it because you’ll be able to keep projects moving forward even during the slowdown.

Note: Alternative materials may change the total cost of a project and  Ally Lending's home improvement financing solutions  also offers the flexibility for service providers to modify the loan amount (up to the max approved amount), before it's funded, with the customer's approval.

Material alternatives. Stalled supply chains have left materials like wood, steel and copper difficult to find and expensive to source. If shortages are affecting your business, consider these materials instead. Wood/lumber: laminate flooring seventy cents to two dollars per square foot, autoclaved, aerated concrete (AAC) two dollars and twenty cents to two dollars and fifty cents per 8 by 8 by 24 inches, cement-fiber siding seventy cents to five dollars and twenty-five cents per square foot, insulated concrete forms (ICF) twenty-two dollars to twenty-five dollars per sixteen by forty-eight inches. Steel/stainless steel: aluminum two dollars and fifty cents per pound, cross laminated timber forty-eight dollars to fifty-six dollars per square foot. Pipes/PVC: cross-linked polyethylene (PEX) thirty-one cents to eighty-three cents per foot, high-density polyethylene (HDPE) fifty-five cents to sixty cents per pound. Copper: cross-linked polyethylene flexible tubing (PEX), for pipes, thirty-one cents to eighty-three cents per foot. These alternatives may not all be viable options depending on state building codes and intended use. Prices stated are estimates and actual figures may vary based on supplier. Sources: The Balance, Home Advisor, This Old House, Logix ICF, Concrete Reinforcing Steel Institute, Metal Miner, Home Depot, and Resource Recycling Inc. Ally do it right.

Be transparent

Meeting customer’s expectations and timelines is always a priority, but the fact is the supply chain challenges have created an unpredictable market. The best way to prepare your customers for that is by being upfront from the start and setting clear expectations, so they can make an informed decision.

Remind customers of longer lead times and if there are orders you can’t deliver, politely decline. It’s a difficult situation but advising customers of the industry wide problem will help them find the best route forward for their
home projects and avoid setting unrealistic expectations.

Have a plan

Just like all the other effects of the pandemic, the supply chain stalls will end. However, the lessons learned can serve contractors well long after these challenging days have passed. By implementing these strategies, you can keep your projects moving forward today and for the better days ahead.

Ally Lending provides solutions that can help make your customers’ home projects more affordable.

Learn About our Home Improvement Financing

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