China, chips and shipping – the channel needs to find new strategies?
September 30, 2021
Printer stock levels in Europe are less than a week’s worth just before more factory shutdowns in China, which is pushing channel players to make strategic decisions to minimise the impact of product shortages, according to CONTEXT, the IT market intelligence company.
The latest data from CONTEXT presented at the recent GTDC and CONTEXT webinar, reveals that for the past year, the supply of notebooks (2 weeks), desktops (3-4 weeks), monitors (2 weeks) and printers (0.5 weeks) has been running on empty.
A straw poll CONTEXT recently conducted among a small number of channel executives also found a majority or near-majority claiming they are seeing a 15%+ shortage in notebooks (68%), monitors (50%), networking products (50%), printing consumables (46%), and printers (41%).
CONTEXT said that amidst the shortfall, channel businesses need clarity of market intelligence to understand how best to proceed. Some key questions to answer include:
- How much of order backlogs is actually panic buying?
- How much of the current market picture is down to change in demand and how much is a result of product shortages?
- How can I best predict and secure prices?
- How big an impact are supply chain issues having and how can I make sure they’re as robust as possible?
“Everything with a chip in it is currently experiencing product shortages. There’s a high level of anxiety from retailers about how they’re going to serve customers in Q4,” said Adam Simon, Global MD at CONTEXT.
“Two big questions remain: where do you place your bets, and how do you manage price uncertainty? 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 channel businesses are having to make, which will have a big impact on their success.”
In spite of the challenges facing the channel, tech stocks continue to soar. Figures for September 2021 versus two years previously show big gains for tech retail (32%), imaging (35%), infrastructure (40%), personal systems (82%), headsets/webcams (108%), distribution (226%) and Google, Amazon, Facebook, Apple, Microsoft (123%).
According to CONTEXT, other factors mitigating the challenge of product shortages for the channel include: rising prices and huge investment in production facilities by governments and chip companies. Also of note are longer-term prospects for innovation, including hardware demand from education, cloud transformation and distribution-as-a-service.
Our take on this: This all might become even worse before it gets better since China has just announced a week of shutdowns for “National Day”. Shipping prices are soaring, companies are facing delays in shipping and production is strangled due to supply shortages of key components. The ‘just in time’ supply chain needs to be maybe thinking of more of a ‘just in case‘ approach globally?
Localisation might be another answer? Localised remanufacturing might have the opportunity to thrive in these conditions. Rather than new products which are stuck in shipping lanes or cannot be made due to component shortages, is there an opportunity for reuse, repair and remanufacturing of printers and cartridges to fill the gaps in demand?
Categories : World Focus
