John Deere takes a proactive approach to ensure suppliers can continue to manufacture parts for them.
By Andrew Joseph, Farms.com; Image of an S770 Combine via Deere & Co.
Everybody is affected in some way by supply chain issues. For the ag industry, sometimes getting hold of the equipment you want, or a part you need for maintenance and repair can be troublesome.
It’s the same for manufacturers, including John Deere, the brand name of the US corporation known as Deere & Company, which is why it has to take a proactive stance to ensure it has the supplies and inventory to keep production going and to help it play catch-up to a backload of orders.
A parts shortage has contributed to a backlog of equipment orders at John Deere.
According to a SupplychainDive article on August 23, 2022, John Deere is attempting to keep on top of shortages by dual-sourcing components, investing resources to increase the manufacturing capacity of some of its suppliers with long-term agreements, and maintaining a larger inventory of raw materials.
Per Brent Norwood, John Deere Director of Investor Relations, “Our ability to carry these higher production rates into next year is going to require higher inventory levels for us.”
Added Rachel Bach, the Manager of Investor Communications with John Deere, “Our factories are focused on finishing and shipping the remaining machines in the fourth quarter which will help our progress toward restoring productivity and efficiencies going into next year.”
The company announced that it will continue with its higher production rates over the next two quarters.
“Any time we have to touch machines or move them in our factories more than once, it comes at a cost,” explained Joshua Jepsen, the Deputy Financial Officer at John Deere. “In that respect, 2022 has been a challenge, given the ramp in demand juxtaposed with the lost production in the first quarter and a challenging supply environment. So, we’ve really been chasing production all year as a result.”