Components shortage? What components shortage?

Exertis Supply Chain Services boss tells CRN that components are out there - if you know where to look

Talk of a components shortage has plagued the industry this year, with multiple vendors feeling the effects of dried-up memory supplies.

Dell Technologies said in June that rising memory costs (as a result of shortages) had an impact on its server business in Q1, while Hewlett Packard Enterprise (HPE) confirmed similar struggles when releasing its own Q1 figures.

On the earnings call in February HPE said that the cost of memory had increased by 50 per cent in January alone, before reporting a further 10 per cent increase in Q2.

The PC market has also been hit, with memory shortages being partly blamed for a 40 per cent price increase in June.

Neal Johnston, managing director of Exertis Supply Chain Services, told CRN that while the industry is right to be concerned about components, it is wrong to say that we are currently in a spell of memory shortages.

Exertis Supply Chain Services works with a number of the world's largest tech vendors and provides services around components sourcing, factory sourcing, auditing and ODM relations.

He said that over recent months the business has seen a spike in the number of vendors outsourcing these services, instead of keeping them in-house, as the fear of shortages intensifies.

"It's a very important topic right now," he said. "We have multiple clients engaging us with for, I won't say a shortage, but component shortage aversion.

"I can't say there are definitely shortages, but there is a concern in our client base on multiple fronts of pending potential shortages.

"In other words they, like the industry, suspect some issues around memory but also around some of the geosensors and the likes that we support some of the clients with.

"Some of that componentry is causing concern - enough that they are engaging with us to help them, and engaging us on multiple fronts."

The supply chain arm is a relatively unknown part of the overall Exertis brand, compared with the larger and more public-facing distribution business.

In the most recent full-year results of parent company DCC Technology, the supply chain business made up seven per cent of the overall £2.69bn revenue, with the distribution business making up the rest.

Johnston said his business is seeing growth of 12 to 15 per cent per annum.

Previously known as SerCom, the business was rebranded to Exertis Supply Chain Services when the various parts of DCC Technology were pulled under the same moniker in 2014. The business has operations in Ireland, China, eastern Europe and the US.

Supply Chain Services will often work with vendors that the main Exertis business distributes, Johnston said, but also works with clients not associated with the distribution arm.

He said that top vendor execs often don't understand the challenges that the supply chain can pose, particularly in times of shortages, but more are now appreciating the benefits of outsourcing to a third party.

"It sounds very easy when you're sitting in the US or Europe with your brand performing super well and you think it's very easy to just go out and find other factories," he said. "You can rock up and knock on the door of a factory in Asia, but can you qualify it, inspect it, insure it, and make sure it's not doing anything untoward with the componentry?

"The commercial guys in these organisations and the product development guys say 'hang on a second, we can have the best products and the best offering, but the reality is if we can't get product to market, that is a very scary prospect so what can we do to avert that?' They go back up the supply chain and that's where we can kick in."