A Guide to HVAC Lead Times: Factors, Strategies & More

What Are HVAC Lead Times?

HVAC lead times are how long it takes for ordered HVAC equipment or accessories to arrive from manufacturers, suppliers, or distributors.

For example, the lead time for a refrigerant or new HVAC system that arrives two weeks after it's ordered is, as you'd expect, two weeks. 

HVAC lead time depends on factors like the size of the equipment, its complexity, the logistical and production efficiency of the manufacturer or supplier, stock availability, and unforeseen supply chain issues.

For example, smaller and standard equipment, such as air filters or thermostats, may have shorter lead times.

In contrast, larger and more specialized components like chillers or custom-designed units take a longer time to manufacture and customize, leading to longer lead times.

Knowing the lead time helps HVAC businesses adjust their schedules in response to potential delays in the arrival of equipment.

Why Short Lead Times Are Important for HVAC Contractors

Why worry about lead times? What's the impact of a short lead time on the HVAC industry?

Increase customer and client satisfaction

A shorter lead time ensures the equipment or components you need to resolve customer HVAC issues arrive early.

Promptly resolving those issues boosts customer satisfaction, increasing the likelihood of a positive review and referral.

Increase sales

Shorter lead times increase the availability of HVAC equipment, enabling HVAC contractors to make more sales, complete more projects on time, and meet customer demand.

Additionally, customers prefer to patronize HVAC companies that can quickly fix their HVAC issues, especially if they're in dire need of the HVAC system. This is important, particularly during slow seasons when job orders are few and far between.

Improve scheduling

Shorter lead times can allow contractors to accurately predict when equipment will be available, which allows them to know when a job will be completed. 

This makes it easier to schedule their work and boosts the productivity of HVAC technicians.

Important note, however:

From discussions with other HVAC companies, we’ve found that trying to schedule jobs and handle bookings manually results in confusion and mistakes like overbooking.

ServiceTitan’s HVAC Scheduling software helps avoid this, even during busy periods.

Julie Marlowe of Vines Restoration, Plumbing and HVAC says, “We schedule a lot of calls a day, and if one of those spots is doubled then we're immediately overbooked.” 

“[Schedule Assistant] has taken a lot of stress off of our technicians, and helped our scheduling team to not overbook our schedule every day,” she says.

With ServiceTitan’s HVAC Scheduling software, CSRs can capture all relevant customer details they need to schedule a service visit. 

This includes the customer’s personal information, their desired appointment time, and details about their problem.

Additionally, instead of using clipboards or spreadsheets, or switching between screens, CSRs can view the availability and calendar on the same screen.

This reduces customer waiting time and helps CSRs handle more calls without a dip in the quality of customer service.

Finally, every scheduled job is automatically added to the dispatch board where every employee can see it.

This provides a single source of truth, eliminating common dispatching errors like sending a technician to the wrong address. 

CSRs can use the dispatch board to send appointment text message reminders to customers and to text on-site technicians on their mobile phones.

This allows them to stay in touch with customers and technicians throughout the scheduling and service process, ensuring that everyone is on the same page and appointments are completed on time, to the customer’s satisfaction.

This streamlined scheduling process facilitated by ServiceTitan, makes it easy for CSRs to handle calls and schedule appointments seamlessly.

Reduce excess inventory

Whenever there are long lead times, HVAC contractors are forced to hold surplus inventory. This reduces cash flow and can lead to overstocking and inventory obsolescence.

Short lead times can reduce the need for HVAC contractors to hold extra inventory to avoid stockouts as they’re confident of getting equipment when needed.

Pro tip:

HVAC contractors use ServiceTitan’s Inventory Management feature to create templates to monitor and maintain preferred inventory levels (more on this later). This prevents overstocking and inventory obsolescence and keeps customers satisfied.

Key Factors Causing Longer Lead Times for HVAC Equipment

Longer lead times are due to a number of factors. They include:

Labor shortages

Labor shortages have had a significant impact on lead times. And it's traced back to the pandemic.

The Covid pandemic has significantly affected the job market and caused a labor shortage through a combination of effects. 

In the United States alone, 250,000 working-age individuals died as a result of the infection, while more people left the labor market due to the effects of long Covid or transitioning from illness to retirement. 

Material shortages

Most raw materials needed in the manufacturing process of HVAC parts and equipment are currently in short supply due to several factors.

Firstly, the demand for copper—used to create the pipes that house refrigerants in HVAC systems—is high, as it’s needed for the manufacture of eco-friendly products like electric vehicles and solar panels.

This is because copper is a highly conductive metal that's relatively abundant and easy to recycle. 

But unfortunately, manufacturers are unable to match the demand.

Secondly, stainless steel is in low supply.

This is due to pandemic-related factors—mine shutdowns, imbalance in demand and supply, and supply chain inefficiencies.

Global semiconductor chip shortage

Currently, there’s a semiconductor chip shortage owing to the Covid pandemic.

And it doesn’t help that almost every major technological innovation uses semiconductors as a key element. This includes cars, phones, LED bulbs, televisions, and even HVAC systems like air conditioners.

This has resulted in longer lead times for HVAC equipment.

Supply chain disruptions

HVAC equipment takes a long time to reach the buyer.

It starts with sourcing the raw materials and then manufacturing, warehousing, and transporting the finished product to the buyer. That's the supply chain.

Any disruption at any point of the supply chain impacts lead times.

Currently, the biggest disruptor has been the pandemic. Although it's over, its effect on supply chains is still being felt. Manufacturing companies have to handle back orders they couldn't fulfill during the pandemic, ports are congested, and so on.

Another disruptor has been adverse weather and its consequences—wildfires, tornadoes, heat waves, and so on.

Both disruptors have led to longer lead times. 

Increased demand

There's been increased demand for HVAC systems owing to a surge in building construction and increasing global temperatures due to global warming.

It's why the U.S. HVAC systems market is predicted to grow at a CAGR of 6.5 percent between now and 2030.

Strategies for Effectively Reducing Lead Times

Let’s make something clear:

Lead times are determined by the supplier or manufacturer. 

So, you have to implement strategies to optimize your inventory management to accommodate longer lead times when there’s a delay.

Place your orders sooner

Try to always order early to counteract any spikes in demand that may cause long lead times and accommodate the time the supplier might spend processing your order.

Additionally, liaise with your procurement or warehouse manager to place an order once they notice inventory is running low.

Cooperate with local suppliers

Cultivate a long-term relationship with a local HVAC equipment supplier. It's advisable to sign long-term contracts with them.

This way, your orders will receive priority and you'll cut down the time for shipping the equipment, reducing lead times.

Additionally, it’s far easier to keep track of the inventory since you’re located close to the supplier.

Consolidate your suppliers

Consolidating your suppliers can reduce lead times.

Consolidation is reducing the number of vendors you buy from to just a few reliable ones.

This way, you'll have greater visibility into your supply chain since there are fewer suppliers to manage, minimizing the likelihood of delayed shipments.

Increase your order frequency and reduce order quantity

Instead of making bulk orders, order small quantities of new equipment at greater frequency.

How?

Enter an agreement with a local supplier to request all your HVAC equipment from them.

This reduces order processing time, shortening lead times.

However, some suppliers may have strict minimum order quantity (MOQ) to cover production and shipping costs.

In that case, leverage your relationship with them and request they hold part of the inventory on your behalf to avoid paying premium carrying costs.

Optimize your inventory management

Optimizing your inventory management is one way to reduce lead times.

Inventory optimization is managing inventory levels to minimize costs while ensuring there's enough to satisfy customer demand.

This keeps carrying and logistical costs low and eliminates problems like overstocking, stockouts, and exorbitant carrying costs.

Inventory optimization involves forecasting demand based on historical data and stocking inventory to satisfy it, keeping track of your supply chain, decentralizing your inventory, and, most importantly, implementing technology.

When it comes to Implementing technology, you could either invest in:

1. Tools built for only managing inventory.

2. Tools capable of managing inventory and every other aspect of running an HVAC business.

It's advisable to take the second option.

That way, you'll save the cost of buying additional tools to handle other aspects of your business operations, avoid tool overload, and streamline your workflows.

ServiceTitan's HVAC software is one such tool.

It's not only an inventory management software but automates all aspects of running an HVAC business.

This limits errors caused by switching between tools and lacking a single source of truth.

With ServiceTitan's Inventory Management software, HVAC companies can easily drill into any inventory item to get its:

• Code

• Name

• Type

• Description

• Tag

• Total quantity—whether it's available, on hold, on order, or on hand—and value

Additionally, they can easily allocate the right quantity of equipment and materials to the places they’re needed. 

From the image below, you’ll also notice contractors can determine the minimum and maximum quantities when allocating inventory to each location.

Aside from automating allocation, ServiceTitan helps automate replenishment. Here's how it works:

From the field, technicians can add items to invoices using the mobile app. 

Once they do so, the replenishment schedule in ServiceTitan automatically updates to reflect the items in need of replacement in a location, alongside their prices.

For example, say a field tech, James, uses two copper tubes from his truck. The replenishment schedule in ServiceTitan automatically updates to show he needs two copper tubes in his truck, as shown below.

Additionally, users can either choose to replenish supplies from a vendor (designating that vendor as a replacement source, as shown in the screenshot above) or from their own warehouse.

If they choose to use a vendor, ServiceTitan automatically notifies them that it's time to begin a purchase order.

This streamlined process helps HVAC companies optimize their inventory management and ensure equipment and materials are always available, allowing them to satisfy customer demands quickly.

To Sum Things Up

Lead time is of great importance to HVAC businesses, since it’s impossible to resolve customer challenges without the right parts or equipment.

However, in some cases, you have no control over the lead time. It’s the supplier who determines it.

The best you can do is control what you can from your end by implementing the strategies listed above and using a tool like ServiceTitan HVAC Inventory software.

The tool will help you minimize errors, automate your inventory management, and eliminate manual tasks, which boosts your employee’s productivity.

ServiceTitan is a software used by HVAC companies and other home service businesses to optimize and automate their inventory management, as well as every other aspect of running their business, like invoicing, marketing, and sales.