SAN DIEGO—It's no surprise COVID-19 has created havoc in supply chains throughout the world. But one rubber seal company servicing the automotive industry is taking extra steps to ensure its customers do not have to feel that pain.
Morgan Polymer Seals, which has manufacturing operations in Tijuana, Mexico, as well as logistics and headquarters operations in San Diego, is expanding its supply of so-called safety stock to guard against any potential customer order disruptions.
Safety stock is inventory a manufacturer chooses to keep on hand at its own expense to ensure customer orders are quickly fulfilled.
Family-owned Morgan Polymer Seals historically has kept about two weeks of safety stock on hand but has doubled that amount to about four weeks these days. The company also is being more proactive about ordering rubber raw materials further out to make sure they continue to have enough material on hand.
"We just chose to hold more stock to protect our customers and ensure that our business runs smoothly," Todd Tesky, vice president of sales at Morgan Polymer Seals, said in an interview.
"We've always held a certain amount of safety stock whether we had a contract or not just to ensure the smooth supply of materials to our customers. But when COVID hit, we recognized that supply chains could be strained. So we just made the decision to order more raw materials and continue to run our factory and build additional safety stock so that, when orders came back in, we would be able to not only meet the needs but exceed the needs of our customers," Tesky said.
Some customer contracts call for the inventory of a certain amount of safety stock, but others do not. Morgan Polymer Seals is tying up more capital in having extra finished parts on their shelves, but the company said the investment is worthwhile.
Being a privately held, family-owned company allows the firm to make such a decision with little fanfare.
Sean Morgan is chief revenue officer at the company that is under his family's control and headed by his father CEO Kevin Morgan. He described the firm as not too big and not too small, a position that provides the flexibility to make quick decisions.
And that's not always the case with competitors that have a more complicated management structure, Sean Morgan said.
"They are often very reluctant to put any stock on the shelves. A lot of them run very much 'just-in-time.' They will fulfill that order, ship that order and complete the manufacturing of that order just before they ship," he said in an interview. "They don't want to have money sitting on the shelf."
Morgan Polymer Seals, however, sees a value in investing in that inventory if that means business will run more smoothly and customer orders always will be filled.
"One of the benefits of Morgan Polymer is we're a family-owned company. We have a relatively flat management structure. We can make decisions like this quickly and easily," Sean Morgan said.
"It's OK for us to tie up a little money and put it on the shelf and protect our customers from unforeseen things like this year or even in some cases 'oopsies' that happen from our customers as well," he said.