'Lead times are less secure than they've ever been' - Distributor bosses on the impact of supply chain issues
Bosses from Westcoast, Tech Data and Westcon discuss the ongoing supply shortages in the channel
The bosses of some of the UK's biggest IT distributors have opened up on the difficulties that stock shortages and moving lead times from vendors are causing when it comes to both meeting orders and the need to provide information to resellers.
Supply chain issues since the start of the pandemic, including shortages of key hardware components like semiconductors, have restricted the amount of stock that is available to resellers and distributors.
In a recent CRN article, some resellers opened up on their frustrations around delays to orders and what they see as an inability to get the right information from distributors following a flurry of social media posts from reseller bosses discussing those same issues.
But speaking to CRN, the bosses at some of the largest distributors operating in the UK have explained the impact that ongoing supply issues are still having, while also highlighting the challenges of dealing with shifting lead times from vendors when it comes to co-operating with resellers.
Antony Byford, Westcon's UK and Ireland managing director, said the company's bookings have been "astronomical" and that its backlog is "two and a half to three times bigger than what it would normally be".
"If we look at the orders that we're placing today, we'll see those coming in between the next four to six months - that's what we anticipate at the moment. Something that would normally be four to six weeks is now four to six months," he said.
"We're working as closely as we can with the vendors to understand when the supply is coming through, and of course, that allows us to give greater visibility to our channel partners as to when they can expect goods.
"But other than staying close to the vendors and communicating as best we can with our partners, the channel isn't going to fix this. This is not something that a new marketing plan or an initiative or investing in more salespeople is going to fix, this is something we've all just got to accept and deal with and work around as best we possibly can."
Westcoast, ranked as the UK's biggest distributor in CRN's top 40 list, is also experiencing a significant order backlog. The company's managing director, Alex Tatham, said the business has "millions of pounds on backorder" and that delivery dates for customers are getting "further and further out" because of supply shortages.
"The first thing we do when a customer phones us, and we say ‘well the the date that can be delivered for you is six months away', is can we look for alternatives? That's the first thing that we do to make sure that they can see whether we can improve on the delivery situation for a compromised product," he said.
"It's very difficult, I think, for vendors, distributors and resellers because, if the goods are in constraint, then they must alert their end users to the fact that they are."
But there are challenges when it comes to relaying accurate lead time information to resellers. In a recent interview with CRN, Tech Data's managing director for the UK and Ireland, David Watts, said lead times are "less secure than they have ever been".
"We work very closely with our vendors and our customers to try and get that right, but the reality is that the information flow moves around a lot in terms of the shortages themselves," he said.
"Shortages would be the vast, vast majority of the feedback we get from customers which is effectively, at the end of the day, about the information flow.
"If you're getting no information from us, then that's something we would always need to correct and we should be better than that. But a lead time moving or being provided to us and passing that on with some caveats around it, is very, very common at the moment."
Byford also said shifting information from vendors is posing problems - describing the situation as a "moving target" - and also highlighted several notable observations and trends as a result of supply shortages.
Those include resellers placing orders with distributors before they have received purchase orders to "get ahead of the game", vendors increasing their prices, and a refusal from some resellers and end users to accept part shipment of orders.
"It's constantly evolving. Every day there's new updates," he added.
"Our supply chain teams are working closely with the vendors to try and get the best possible data we can get out of them, but they're very much dependent on the chip manufacturers providing them enough data."
The CEO of semiconductor producer AMD, Lisa Su, recently predicted that the chip shortage will become "less severe" in the second half of 2022 but warned that the first half of the year is still expected to be "tight".
Distributors that spoke to CRN said the products that are still experiencing shortages include notebooks, printer products, mid-range business PCs and switches - and, like Su, all expect the situation to continue into at least next year.
"I would suggest that, at this point, we can't really see an end to it. It won't improve for at least another six months." Tatham added.
Meanwhile, Watts predicted that notebook shortages and other finished product shortages would "go into next year" and that "individual components impacting unfinished products" would "carry on for the whole of next year to some extent or another".
So what advice do these distributor bosses have for resellers?
"Just work closely with us, we'll provide you with updates regularly," Byford said.
"Look at diversifying your business, look at SaaS technologies to help you find new revenue streams, look at our refurb programmes because they're going to be in good shape.
"Work with your end users to accept part shipments. Because, when end users pay for the goods, the reseller pays us, we pay the vendor and the vendor then pays the semiconductor supplier. If the vendors aren't paying the semiconductor supplier, then guess what? The semiconductor suppliers are not going to provide to the vendor."
And Watts added: "The thing I would ask for our customers is to say, first of all, we want to always do our best. Let us know if you feel like we're letting you down and we'll address it.
"But be very cautious about lead times, because they're moving around quite often, and, although we're doing our best to be prudent when providing the times, we're only basing them on the information we're given.
"If I was committing resource on-site for an install, for example, I will be very cautious about that at the moment."