Imagine you’re grocery shopping for a family of four. They’ve asked for bread, milk, eggs and peanut butter.

Simple, right?

But what if one family member is gluten free, another is lactose intolerant, the third is vegan and the last has a peanut allergy. Now, you need to purchase twice as many items – gluten-free bread, soy milk, plant-based eggs and almond butter.

You’ll also need twice as much space in your refrigerator for those items – and that’s the dilemma HVAC distributors are facing on a magnified scale right now. Two government regulation changes have the potential for a perfect storm to turn HVAC inventory and warehousing upside down.

Consider first the U.S. Department of Energy’s SEER changes, which increased the minimum SEER for new installations and altered calculation methods for testing. That switch left two lines of equipment – the traditional SEER and the incoming SEER2 – in many warehouses across the country.

To compound the issue, the Environmental Protection Agency is phasing out HFC refrigerant and replacing it with A2L refrigerant starting in 2025. This is yet another product change for air conditioners and heat pumps. For companies such as Munch’s Supply who distribute more than one brand – we sell both American Standard and Trane – that turns into a significant selection of products to keep on hand.

Given that a distribution warehouse might carry 5,000 to 10,000 SKUs at any given time, these extra varietals add countless new parts to the inventory. Planning, strategy and – above all – communication will be essential throughout this transition.

PLANNING WITH MANUFACTURERS AND CUSTOMERS

The last thing a distributor wants is to enter 2025 with multiple versions of air conditioners and heat pumps. That means strategic ordering is a must for the next two years, balancing a tightrope of outgoing equipment demands and incoming equipment expectations.

Ongoing conversations with manufacturers will be essential during the next two years, so we are able to get the products our customers need without being left with stranded inventory come 2025.

At the same time, customers can’t wait the standard four- to six-week lead time for equipment that isn’t already in stock.

Ongoing conversations with manufacturers will be essential during the next two years, so we are able to get the products our customers need without being left with stranded inventory come 2025. Find out what their rollout plan is, what their current production looks like and when they’ll be changing to the A2L refrigerant.

It’s also important to understand your dealers’ sales strategies through 2025. Are they recommending the new unit upgrade to customers, or are they still most comfortable with the versions they know and trust? Dealer feedback is a goldmine for distributors in 2023 and should be a key factor in your buying decisions.

EFFECTIVE DATA MANAGEMENT

Take a deep dive into your inventory in search of weak spots. Just because you have a data management system doesn’t mean you’re using it well. Is your data accurate and up to date? Are you correctly analyzing information? Perhaps just as important – are your employees quick to adjust? Bad decision-making can be just as damaging as a lack of data when it comes to overstocked shelves.

This is where in-house communication comes into play. Work with your team to establish best practices and implement solutions organization-wide that make your inventory processes increasingly nimble.

Then, remind your employees about these ongoing inventory challenges. Now isn’t the time to abide by routine ordering standards. Each scenario will need special forethought, from where to house new equipment lines to customer feedback on buying trends.

PROACTIVELY PROVIDING EDUCATION

There’s no understating the value distributors will bring to the industry in the coming two years. We are positioned to help this transition flow smoothly from manufacturers to homeowners.

To start, we must be proactive with technician training surrounding these new technologies. Technicians must understand the environmental value of these changes, but also their consequences. Depending on the unit they offer, parts are likely to become more limited and replacement refrigerant will become increasingly expensive moving forward. Starting in 2024, HFC production will be cut by 40%.

Additionally, this switch is moving from a nonflammable refrigerant to a mildly flammable one. That means storage guidelines will change, and we should expect extra safety measures and protocols for transport, storage, testing and installation.

While there’s plenty of technical education to happen throughout this transition, messaging also will be critical to share. Technicians need to effectively communicate these changes to their customers, including the nuances of each product, as they help homeowners make buying decisions. We also should expect that education will be an ongoing process throughout this rollout, as unintended consequences most certainly will arise from having all three versions of equipment in the marketplace.

We know without a doubt that the upcoming transition won’t be easy. It will push our inventory limits and test our buying strategies. But one thing is clear: The only way to navigate this more easily is by talking about it. From manufacturers to customers, let’s keep the lines of communication open.

That will be our road to success.