Shortages cause the channel to ask questions

Anyone with a car will understand what shortages have felt like over the past few days as petrol stations run dry – and there are continuing issues in the IT industry, with some key components remaining in short supply.

Vendors across the hardware world have used their quarterly financial updates to reassure investors that they are coping with chip shortages and some vendors have praised their own teams and distribution partners for their performance over the past 18 months.

But the reality is that component shortages are continuing and are set to drag on into 2022, and for the channel that means making choices about how to get through the challenges.

Research from market watcher Context about the supply chain issues was recently discussed by the Global Technology Distribution Council (GTDC), with it clear that problems are plaguing most areas of the hardware world.

Context revealed that there had been problems for the past year, with notebooks suffering delays, desktop orders, monitors and printers all being impacted to various degrees.

“Everything with a chip in it is currently experiencing product shortages,” said Adam Simon, global managing director at Context. “There is a high level of anxiety from retailers about how they are going to serve customers in Q4.”

The firm quizzed a few channel leaders to get a sense of what was happening now and discovered that notebooks and monitors were still causing problems, along with networking products, printing consumables and printers.

With shortages a feature of the market as the channel gears up for an important fourth quarter, the pressure is on to decide on a strategy and find answers to some of the current questions, including around predicting and security prices, where are the product shortages biting and what are the dangers of panic buying?

“Two big questions remain: where do you place your bets, and how do you manage price uncertainty?” said Simon. “Do you bet on solidity and commercial demand or that the consumer boom will continue? Do you go for premium or low-cost products? Do you go for long- or short-term contracting? And when and how do you pass price rises on to end-customers? These are the tough decisions that channel businesses are having to make, which will have a big impact on their success.”

There are signs that even with the supply chain issues, faith is being kept in the IT market, with tech stocks for those operating in the hardware market continuing to rise as investors look to the sector’s long-term viability.

Manufacturers are also making efforts to increase production and take steps to reduce the shortages, and that should start to filter through. Rising prices will also put the brakes on some of the spending, giving the channel more breathing space.