With the demand for IoT devices, connected cars and consumer electronics accelerating, every industry is clamouring for silicon chips. The IT channel is no different, and the chip shortage has forced value added distributors to create innovative workarounds to keep product moving.
The impact of the global chip shortage continues to ripple across the IT supply chain. Stemming from the pandemic, it has taught businesses they need to be more agile, which isn’t easy in the IT ecosystem. But COVID-19 is only part of the problem. The pandemic has brought to light issues that have been lurking in full view for a long time – that supply chains are built to be lean, not resilient.
Until the pandemic, resilience had taken a backseat to agile and optimised supply chains, designed for high efficiency and low costs. In the face of disruption, it’s now critical to think about resilience strategically and practically. Leveraging the expertise of a value-add distributor like Westcon-Comstor can help resolve the long-standing tension between efficiency and resilience.
Building a buffer with agility
During the pandemic we saw a big shift in global service providers and systems integrators going direct to the vendor – thinking that if they needed products in a hurry, they’re better off cutting out the middleman. The ‘a-ha’ moment for many happened when they realised the opposite was true.
Vendors and manufacturers are not good at providing supply chain flexibility. Their manufacturing-to-order processes are very rigid and struggle to accommodate change. Material shortages create massive order backlogs, and customers who go direct get locked into an inflexible queue.
By contrast, value-added distribution provides a buffer. We have the flexibility to move product around in a bespoke and agile way. Our global customers have started to realise this and they are now talking to us about removing this supply chain risk by leveraging our value-added capabilities.
In addition to presales, services and flexible payment solutions, these capabilities are now a fundamental differentiator, and they take the pressure off vendors so they can focus on building and shipping product rather than order management.
Hold the front page: vendors don’t hold stock
We work closely with vendors to create accurate forecasting and visibility of what our customers need, and we have invested heavily in inventory to build a buffer for our global customers. This enables a clearer view of the end-to-end supply chain which allows us to identify, react to and manage the disruption.
Unlike traditional VARs, service providers and system integrators require high-end networking and security equipment, which have been most impacted by the shortage. We work closely with our vendors to pre-order and replenish specific inventory – when we know what our global customers want, we can increase our stock on hand accordingly. This is especially useful for customers who have critical projects in the pipeline yet are not in a position to deal with partial shipments or warehousing requirements.
Driving savings with remanufactured equipment
Another way we tackle supply chain disruption is our Circular Technology Solutions (CTS) offering – our ability to supply OEM certified remanufactured equipment, for example Cisco Refresh or Juniper Certified Pre-Owned (JCPO).
We can overcome the problem of blending remanufactured product into a complex order by breaking the order down, inserting the remanufactured items alongside new product, and delivering a complete solution quickly, cost-effectively and efficiently. This removes the problems associated with the secondary or grey market, such as brokers selling on decommissioned, uncertified or even counterfeit product.
Putting resiliency into practice
The current silicon chip crisis has highlighted our unique ability to help our global customers meet their end customer needs using our supply chain agility to build resilience in an increasingly challenging market.
We leverage technology and tools and dig deep with our channel partners, working closely with our Global Supply Chain Solutions team and vendors to take action together to mitigate risk.
In today’s connected world, everything runs on electronic components. The pandemic may have forced the slowdown of the IT supply chain, but we are working together to provide solutions that will allow our customers, and their end customers, to come out of the pandemic stronger.