NYT: "Big Tires in Short Supply"

Procurement and operations executives never like to hear the words "supply” and “disruption" together in the same sentence. But in today's increasingly volatile markets, the chance of supply disruptions across categories continues to rise. The New York Times (free registration required) had a good article today on just such short a shortage which shows no sign of abating. According to the article, "Mining companies are complaining about a shortfall in the supply of the giant tires that go on large dump trucks and other heavy equipment. These outsize tires stand as tall as 12 feet tall and can spread 4 feet wide. They are used prominently everywhere from the Canadian tar sands to open-air coal mines in the United States and China, but lately they have become almost as precious as gold and silver: prices have quadrupled for some of them in the last year to more than $40,000 a tire ... Some companies have been forced to idle their heavy equipment or alert investors of the impact of the tire shortage." The current shortage of giant tires should be a wake up call to all Spend Management professionals that a single supply disruption can wreck havoc with a firm's bottom and top lines. It should also give companies pause that are thinking about reducing spare parts inventory levels to preserve working capital. With no clear sign of global demand for basic commodities leveling off, I would bet that this will be the first of a number similar stories we'll be reading about in major business and news outlets in the coming year.

Jason Busch

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