David Meeks is Continental Battery Systems’ senior vice president of supply chain. He joined the company in November 2022 and brought more than 30 years of supply chain experience across wholesale, electrical and industrial distribution industries.
We asked Meeks about the state of the supply chain in the battery industry, the lasting impact of the COVID-19 pandemic and what to expect as the supply chain continues to recover.
This interview has been edited for length and clarity.
Continental Battery Systems: Talk us through the battery supply chain. What does it look like for Continental Battery Systems?
David Meeks: We have both domestic and international manufacturers who are manufacturing both brand-labeled and what we call black box or unlabeled batteries. Then you have different layers in the customer base. There’s distribution (like Continental), battery specialists that are smaller wholesale-type distributors selling direct-to-customer, and [other types of] battery retailers.
CBS: You have had a long career in supply chain management but are fairly new to the battery industry. What are some of the similarities and differences you’ve noticed?
DM: What I’ve learned about the business is that it has its own cycles that are not necessarily tied to consumer indexes. In a bad economy, aftermarket battery sales go up, not down, because people are holding onto their vehicles longer. In a market cycle where interest rates are low, new car sales are up, people are replacing older automobiles, the aftermarket battery sales may be less in those cycles.
CBS: Where do delays usually happen along the supply chain?
DM: When you look at the international side, delays most often happen at the manufacturing facilities and ports of the export country. In fact, one of our suppliers recently told us there [would be delays due to] a trucking strike in Korea. Things like that can cause delays. In the U.S., delays happen when our ports are overwhelmed or at the point of transportation from the port to distribution centers.
CBS: The market for lithium batteries is growing. What are some challenges new technology poses to the battery supply chain?
DM: We’re really grappling with what that supply chain network looks like. The things that make it different are handling and storage. Due to local codes, you need special permitting for storing lithium products. Also, you cannot transport lithium batteries and lead-acid batteries in the same vehicle. That changes transportation as well as reverse logistics.
CBS: The COVID-19 pandemic affected nearly every industry — including batteries. What were some of the most prominent impacts to the supply chain?
DM: As you can imagine, in China, they manufacture a lot of batteries. Then one day, they stop shipping everything because of a pandemic. But you don’t shut the factory down immediately; it continues to build up a backlog. It’s almost like a clog moving through the drain.
[On the U.S. side], supply chain constraints caused delays in product arrival, which resulted in service level misses. This added pressure to go out and source products from other sources than we would normally buy from. Uncertainty over when things would come in led to overordering.
What’s happened now, post-pandemic, is the supply chain is starting to rebound, and the lead times are shrinking. They are shrinking at a rate much faster than anybody in any industry could ever predict, which is now causing an inventory glut at virtually every distribution point.
CBS: What do you foresee happening as the supply chain recovers post-pandemic?
DM: Factories are going to dial back some because of the lack of demand and we're going to have another whiplash. Not as severe as before, but as these inventories burn down, [over the next] four to six months as we work through this, factories are reducing their forecast, reducing their staff, reducing their production. Then we're going to be back to normal and asking for more than they have.
We’re going to be waiting a little bit and we're going to repeat this cycle probably one more time, in my best estimate. Shorter than before, but I do see another wave of supply chain variation.
CBS: How do pandemic-level disruptions compare to typical supply chain disruptions you’ve observed over your career?
DM: Nothing close to this magnitude. Most of everything I’ve seen in the past 30 years has been very short-term. The impact has been finite. The recovery has been much faster. I would compare [pandemic-related supply chain issues] to an earthquake with a lot of aftershocks. We just had a 7-magnitude earthquake and now we’re living through the aftershocks, trying to recover from that.
CBS: What are some of the lessons we can take away from the pandemic as it relates to the supply chain?
DM: I would sum it up in supply chain visibility. If you don’t have clear visibility into your supply chain and have good methods of tracking your products moving within your supply chain near real-time, you will be surprised.
I think that's where most of the conversations are happening with supply chain disruption right now. The impacts when [disruptions] are a surprise are of a different magnitude than if you have time to plan for them. So, for example, for us, knowing when your inventory is going to peak two months or three months ahead of when it does peak is valuable.
We did not always have a clear view of when and how and how much that was going to happen. That’s a high priority for me right now, to build in supply chain visibility so that when the day comes and we do have disruption again within the supply chain, we know it's coming before it gets here, and we can plan appropriately.