Supply issues a bigger threat to channel's growth than demand, Exertis boss tells CRN
Component shortages represent 'one of biggest challenges this year', DCC Technology MD Tim Griffin says in interview with CRN
Supply constraints represent a bigger threat to the channel's growth this year than any dip in demand for remote working kit, DCC Technology managing director Tim Griffin has told CRN.
The distributor - which trades as Exertis - yesterday announced that its global revenues hiked 15 per cent to £4.5bn in its year to 31 March 2021 thanks to booming sales of WFH products during lockdown.
Operating profits rose by a more modest 11.8 per cent, reflecting a switch in its product mix in favour of lower-margin consumer and remote working kit and lower AV and B2B sales.
Although the UK market in particular is up against tough comparables from Q2 2020 - when remote working tech flew off the shelves - Griffin predicted that the appetite for hybrid working solutions will shore up demand in the coming months.
"There was a knee-jerk reaction to working from home, and it was a scramble that took place to get people productive," he said.
"I think people are going to get more organised in terms of the type of equipment they have at home and have more of a robust solution, and I think that's going to hold up demand."
Echoing warnings from the likes of Cisco CEO Chuck Robbins and analyst Gartner that a components shortage currently inflicting everyone from PC makers to car manufacturers could drag on for months, Griffin suggested that supply issues are a greater threat to growth than anything demand related.
"You've seen the supply chain get asynchronous in terms of demand signals, and you're seeing that play out in a variety of places - most notably in the motor industry where it's killed the feed into the components and they can't ramp fast enough," Griffin (pictured) said.
"I think one of the biggest challenges you'll see this year is less around demand, and instead whether or not you can fulfil it."
Andrew Henderson, CEO of memory distributor Simms International plc, concurred with Griffin, predicting that the supply deltas will remain for Q2 and Q3 2021, adding that "some reports suggest this will last until mid-2022".
Simms' May market update predicted that server DRAM prices will rise by a further five to eight per cent this month, respectively, following increases of 20 per cent in April.
"The current market conditions mean we are in a ‘perfect storm' of increased demand coupled with unprecedented supply challenges," he said.
Global gains
Part of Dublin-based, LSE-listed conglomerate DCC Group, DCC Technology enlisted former Dell-EMC UK MD Griffin to help internationalise its business in 2018. Griffin said the distributor had achieved this "faster than we anticipated" - due partly to Brexit and the distraction of a major SAP roll out in the UK last year.
Non-UK sales rose to 44 per cent of the total in its fiscal 2021, with the three acquisitions Exertis made during the year all occurring outside its largest market.
"We now have SAP live and have got through that knot-hole, so expect us to be acquisitive," he said.
"Our model is a third/two thirds - ie looking to be a third through organic growth and two-thirds through acquisition. [Last] year we happened to have three-quarters through organic growth, mainly because acquisitions have been a little tricky in a remote world."