The global supply chain shortage is an opportunity for partners to increase their margins, according to Canalys CEO Steve Brazier.
Speaking at the analyst firm’s annual Channels Forum event, Brazier declared that there is a silver lining for the channel amidst the current global supply crisis.
“For the channel, what does supply shortages mean? Well, it might mean you can’t invoice an order at the end of your monthly report and miss your target, I guess that’s bad news. But it also means a whole lot of good news because with supply shortages, prices go up,” he said during his keynote speech.
“With supply shortages, you change the conversation with your customer from ‘Which product is cheaper?’ to ‘Which product can I deliver first?’ You can also go to the customer and say, ‘You may want to stick with buying that brand but there might be a six-month delay, have you considered an alternative brand?’ – and that choice creates margins.
“There is no doubt that one of the reasons why the channel is doing very well right now is shortages. We predict shortages will continue for at least the next 12 months, and most likely well into 2023”
The semiconductor shortage – which pre-dates the current crisis by several years – remains exacerbated by the relentless innovation of the IT industry but is also feeling the pressure from other industries that have become more reliant on technology, Brazier continued, adding that this situation is proving the value of distribution’s role in the channel.
“Supply chain is suddenly a key differentiator for everybody; for the channel partners how do you get to the customer? Can you meet the commitments you’ve made? For the vendors, have you procured enough components? How much inventory do you stock? More than in the past? And can you deliver that down the chain?” he declared
“It also makes the key value of tech distribution incredibly valuable, getting the precious stock you have to the right place at the right time as quickly as possible. And more importantly, making sure the communication flow is coming through so that everyone in the chain is well informed of the situation”
Brazier also chastised vendors for prioritising their semiconductor placements, highlighting the oversupply of Chromebooks on the market as a result of the US pausing education expenditure. These components could have been better used elsewhere, he stated.
“Due to the pause in education expenditure, the US is currently in an oversupply situation [regarding Chromebooks]. So the vendors, in a way, made the wrong bet: they put the semiconductors in the Chromebooks for US education, when they probably should have been putting them into other products which were in more urgent demand,” he elaborated.
“Managing those choices around supply chain is critical and the distributors are incredibly valuable. It’s always been a puzzle to me how people dismiss the value add of getting products from A to B as if that’s a given, as if it’s simple and there’s really no work involved. It’s not true, and it’s never been true. But it’s even more true now when there are shortages of lorry drivers, shortages of products, and everyone’s desperate for stock. The role and value of distribution has gone up.”
