Could Better Forecasting Stop Another HVAC Supply Chain Problem?
The refrigerant shortage issue has made the Summer of 2025 a tough one for distributors. A summer they will not forget.
This is the second time in the last five years that distributors have been put in a tough spot. The first was in 2020 when the unexpected COVID pandemic caused supply chain headaches in about every industry, including HVAC. Just when they had finally faded from their minds, the R-454B refrigerant shortage hit the industry.
In both instances, distributors found themselves in a tricky situation. There was a lack of products from manufacturers and a steady demand from contractors. Contractors were understandably fatigued by supply chain issues during the refrigerant shortage and were not as forgiving as they had been during COVID.
What did the industry learn during these two crises? In a Voice of the Distributor survey done by HARDI, the disconnect in industry forecasting highlighted at least part of the problem.
Distributor survey responses in 2024 and 2025 indicate that demand forecasting remains a challenge for many businesses. In the 2024 survey, 29% of respondents indicated that their forecasts of 2023 demand equaled actual demand, and 9% indicated that their forecasts differed from actual sales by at least 15%.
In 2025, just 24% of respondents noted their forecasts of 2024 demand equaled demand, and 8% indicated that their forecasts differed from actual sales by at least 15%.
So that means in the last two years, HVAC distributors are saying on average, only 25% of their forecasts have proved accurate.
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“When you look at the survey that we did, it seems oftentimes these conversations between distributors and suppliers can be a bit more transactional than they should be, instead of really understanding what the other party is going through,” said Zachary Perge, HARDI vice president of distribution strategies. “It seems very ‘eat your vegetables,’ but it makes a big difference.”
Despite the long on-ramp to the refrigerant change, the industry was caught a bit flat-footed. There were certainly other issues at play, but forecasting played a significant role — just as it did in 2020.
Perge thought the forecasting got lost in a sea of other information as the industry prepared for the refrigerant transition.
“I do not think we had enough focus on the actual forecasting and the business planning side of it,” Perge said. “This was so heavy in terms of being code compliant, understanding the equipment, and what's a system versus a unit versus an add-on. Maybe we didn't do enough coaching about ‘How do you feel this will affect your business?’ ‘How do you think this affects your end consumer?’ And everyone was doing all their communications with their hearts in the right place. I wish we would have had a little bit more of a lens as an industry around forecasting and business planning.”
Undoubtedly, part of the problem was that different OEMs had different timetables. Some wanted to rip the refrigerant band-aid off, while other folks tried to time it in a way that they ran through inventory. It made things more difficult.
“It comes back to the really controllable things around communication and forecasting,” Perge said.
The survey from HARDI highlighted that one of the problems with forecasting is that the groups are operating in isolation. Distributors work through their forecasting, leaning on ERPs and contractors for the information. But it looks like very few pass that information along to the manufacturers.
And it is a two-way street, because very few suppliers are sharing their forecast information with distributors. A forecast is only as good as what your partner can produce for you. The lack of communication and regular touchpoints is hurting the industry in a big way. Much more regular and open communication is needed so we will not soon be talking about a third supply chain issue.
This is not a silver bullet that will solve all the problems. Even when everyone is pulling in the same direction, forecasting is tough. I try to forecast all the NFL games each weekend, but somehow DraftKings still keeps a large chunk of the money I bet each Sunday.
“You talk to OEM suppliers, and they say that they have deep relationships with their distributors and that they feel like they understand them. That they forecast with them. But when you talk to distributors, they say the conversations are much more about products and a lot more transactional. There is a disconnect there. The sky is not falling, but there is a disconnect,” Perge said.
Even worse, Perge said he has talked with a lot of distributors who just laugh when asked what kind of forecasting data they get from suppliers.
Getting on the same page would be good for all. A good place to start would be by reviewing the Voice of the Distributor survey. It can be found at https://hardinet.org/voice-of-distributor.
