Disruption of the Supply Chain and Its Impact on Partners
Disruption of the supply chain during the pandemic has accelerated. We asked partners how this has impacted them.
October 29, 2021
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“For us, the implications seem to go one of three ways:
The customer is also experiencing supply issues and thus is understanding of the situation. This instance has not led to a degradation of relationships.
The customer is unhappy with, but accepting of, the supply chain issues. This has led to a slight degradation of relationships.
The customer has decided to purchase via channels not involving us. This has resulted (in various instances) in a significant degradation of relationship, unexpected costs on their side, or unexpected negative consequences concerning security/warranty/customer service.
“The items on the above list are short-term impacts; a long-term supply chain disruption, I believe, will degrade the abilities of our engineers to manage customer infrastructures as multiple brands, models, and types of machines are incorporated into their architectures. This could lead to inefficiency and less-than-ideal security. Should supply chains resume in the next quarter or two, however, I believe the long term impacts will be minimal.”
“The current pandemic will continue to have major long-term and short-term implications on businesses worldwide. However, for us, our relationships remain strong, because this reality is precisely why Cloud Carib has built the model it has. We buy more and more in terms of volume than the average company might need, so we essentially resource in excess of current demand because we have to be able to meet those needs. Our business model is designed to be able to supply our customers with what they need – when they need it.
“This forces us to constantly buy ahead of delayed trends. It’s also one of the reasons we are such advocates for migrating to the cloud. In cases where we aren’t able to provide physical hardware, we have the capability to set up the necessary cloud environments for our customers allowing them to focus on business continuity. Using an MSP model with many of our partners, we can minimize how this impacts customers versus being just a reseller. This speaks to the trend of partners moving to a cloud services model with easier scalability positioning MSPs as more resilient to immediate supply chain issues.”
“This is actually quite an interesting topic for us as well as the wider channel, so I have provided a bit of my stance around this. Maybe this will help provide some insight as to what has occurred, the impact to the channel and also how we overcame the situation.
“Throughout 2019 and leading up to the initial lockdown in the UK in March 2020 from the pandemic, Vissensa had been focused on introducing and encouraging collaboration and remote working into the workplace through tools such as Microsoft 365 and Google Workspace. Government legislation and the introduction of the requirement to work from home led to a substantial influx of businesses introducing not only these tools in accelerated time frames but the need to also source hardware to enable staff to work from home.
“Information from suppliers in the latter parts of 2019 and early 2020, was that some of the main manufacturer hubs for major vendors were already seeing restricted productivity leading to relatively modest delays in sourcing laptops, servers, storage and more. As the pandemic started to impact other countries, the advance notice was compounded with the surge in demand leading up to the UK lockdown, which led to suppliers being overwhelmed with the demand alongside waiting for ordered overseas goods, leading to either depleted stock levels right at the point that businesses needed them to accommodate remote working.
“The just-in-time model for stock management for not only hardware supplier/distributors but also for supermarkets was severely put to the test, and unfortunately the knock-on effect has meant partners like ourselves have had to work with our customers to re-evaluate standard designs or models of hardware entirely based on stock availability and time to order. For example, laptops seem to be present one hour and then gone the next, so customers have had to streamline purchasing processes in order to place an order quickly to secure what stock is available.
“Over the past 18 months, the ability to revert back to the previous model of just-in-time seems far from a possibility with depleted stock, significant back orders and shipments being seen to land at the beginning of 2022, encouraging businesses to be more open to different vendors/models. This has also impacted businesses which are on refresh cycle whereby they have a significant amount of hardware to replace, but with excessive lead times it has meant they have either extended warranty, simply decided to not cover by warranty and replace on demand, or in the worst case scenario continue to run their infrastructure on unsupported hardware.
“However, this has led to Vissensa being more agile in the way we work through opening multiple distribution channels and partners over the last 18 months to enable us to source hardware from different routes rather than a single supplier, reducing the impact on a single supplier’s stock availability. We have also started to provide customers with the option of Grade A refurbished laptops or open box (returned) laptops, which not only provide substantial discounts but also seem to not have the same level of stock-level impact as new devices needing to be built and shipped from overseas.
“However, the concern around “cutting the middleman ” is an interesting topic as some vendors do seem to have stock availability on their website whilst distributors are seeing three-to-four month lead times for the same item – questionable, but it is entirely based on where stock sits and the planning around stock. The impact is not as far reaching in the long term and seems to be more of a short-term burst, when stock level depletes and then normalises, but this will mean many partners and distributors may see more of the stock level issue leading up until the end of 2021.”
“As is the case with just about every vertical and market, the supply chain is an absolute disaster. We saw a spike in hardware requests (laptops, PCs, cameras, headsets) when lockdowns first hit and people were forced to work at home. Things improved in summer 2020, but got tight again during the holidays. Ten months through 2021, we’re back to where we were in April 2020.
“We standardize client hardware as much as possible; 95% of our client base will find the same laptop or PC sufficient. We use one brand of switches, one security solution, one model of monitor and one brand of wireless hardware. All of this through three distribution partners. Presently, however, we’re seeing delays into mid-late 2022 on everything from switches to monitors, while firewalls and laptops are only somewhat delayed (although back-order dates swing drastically, almost daily).
“We’ve had to become somewhat nimble in terms of vetting other solutions (especially switches) or going direct to manufacturer, but also had to improve our communications with clients. Most have seen the supply chain issues in other areas (or on the news), and as long as we communicate and keep them up to date in terms of status and availability, they’re generally accepting of the delays we’re seeing.
“Short-term, this is a real pain in the butt. Long-term, we’ll stick with those who’ve served us well, and who offer products and services that are best for our clients. We’ll fill in where we have to, but those will be temporary fixes as we wait for the supply chain issues to figure themselves out.”
“We have definitely seen a lot of impact from supply chain issues and we are trying to go direct where possible. That said, a lot of times the lead times for equipment are slipping to four to six months no matter who you buy it from. There is also a unique challenge of customers sitting on service orders because hardware is out so long.
“This results in a lot of engineers on the bench, sales people waiting to get paid commission and frustrated customers not getting their projects completed in a timely manner. We are also expecting a deluge of work when the dam breaks and as inventory becomes available in batches. Very challenging to juggle indeed.”
“We initially got creative by substituting comparable items for the ones in short supply, but those have also run out at this point. Now we’re working to communicate frequently with our clients and set clear expectations. As a managed service provider, we haven’t gotten cut out, but supply chain issues have turned into a headache for us in terms of the extra time and planning required.
“For example, we’re advising our clients to order in advance and move up life-cycle order dates. Bigger projects and initiatives must be signed off on anywhere from three to six months earlier than usual. Additionally, we’re asking the organizations we work with to order extras of common items like laptops and PCs. That’s especially important for growing companies.”
“In the short term, businesses are having to scramble to source their equipment and that means, as you suggest, cutting out the MSP if they can’t deliver. We have customers who want a laptop yesterday who are running down to Staples or Best Buy and grabbing what they can get, even if it is not a business class computer. I think this is just a short-term boost to the big box stores as they generally do not have the type of equipment or expertise that an MSP has, let alone the business relationship.
“In the long term, there can be an erosion of trust if you, as an MSP, do not get out in front of the problem. If customers cannot get the equipment they need from you when they need it, they will go elsewhere, and the MSP starts to lose the trust of the customer. That is why it is so important to have planning sessions with your customers.
“We make sure customers are aware of the issue and we look at their needs for equipment in demand, like laptops and monitors, and order farther in advance than we might have traditionally. We call this our ‘life cycle planning’ process and have put special emphasis on the supply chain issues this year in having those conversations. We also stocked a few laptops that we bought ourselves to have on hand for when the customer inevitably calls saying, ‘We need a laptop tomorrow for the new sales person I forgot to tell you about.’ We are doing our best to use this to build trust and by informing and planning and not let it erode trust.”
“Because we’ve saved for a rainy day, we’ve been able to weather the storm better than most of our colleagues. Ultimately we were able to secure allocations of our run-rate stock to ensure we were able to meet our clients’ requirements.
“I’d estimate we’ve had to spend about three times as long sourcing/securing smaller items. However, 95% of the time we have been able to meet our clients’ needs. The exception to this has been server hardware. Delays in chips have resulted in delays with supply. However, it has forced us (Cymax and our clients) to plan further into the future in terms of install dates/annual leave entitlements as well as other projects we can slot in while waiting.”
“An imminent action we’ve had to take is to review inventories with distributors to see how we can homologate our services to the specs that stock hardware provides.
“Secondly, we anticipate opportunity closure success rates with procurement so they can quote or buy (at risk in some cases) hardware in advance so we meet delivery expectations.
“Lastly, in the long run, an emphasis on cloud-based solutions will gain momentum, and customers will have to settle for availability and MSPs’ creativeness to deliver expectations without jeopardizing quality and security.”
“An imminent action we’ve had to take is to review inventories with distributors to see how we can homologate our services to the specs that stock hardware provides.
“Secondly, we anticipate opportunity closure success rates with procurement so they can quote or buy (at risk in some cases) hardware in advance so we meet delivery expectations.
“Lastly, in the long run, an emphasis on cloud-based solutions will gain momentum, and customers will have to settle for availability and MSPs’ creativeness to deliver expectations without jeopardizing quality and security.”
Since the pandemic shook up the supply chain and hardware solutions and orders, many have had to re-examine and reconfigure logistics and suppliers.
That has led to some disintermediation in the traditional sales and services pattern, which essentially means cutting out the middleman (the distributor and partner). There are obvious implications here, but what is the deeper short- and long-term impact on partners?
We decided to ask them. Our slideshow above offers insights.
Want to contact the author directly about this story? Have ideas for a follow-up article? Email Allison Francis or connect with her on LinkedIn. |
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