Distribution Roundtable: Distributors Detail How They Continue to Bring Value Regardless of Volatility
Experts from the industry’s top wholesale distributors discuss elevating their services to help dealers and integrators navigate global constriction of the supply chain, promising markets, and technologies.
Most of us ponder at one time or another — often with maddening frustration or head-shaking disbelief — if the adage of common sense being in short supply is all too true.
Fortunately for the electronic security industry, faced with a supply chain shortfall of historical proportions, common sense is prevailing. As they did so admirably in contending with ordeals like the recession and pandemic, dealers and integrators have been proving their mettle and demonstrating resiliency by deploying strategic solutions and creative alternatives amid slowed product availability.
At the center of it all are their wholesale distribution partners — in some cases acting as miracle workers for dealers/integrators and manufacturers alike — as the glue that continues to hold the channel together.
The supply chain is not the only concern or disruption for distributors, but it has definitely risen to the top of the list.
“In the pandemic’s wake, after the initial lull of business and uncertainty, the industry proved its resilience and bounced back in abundance. Unfortunately, there is demand increased with supply loss, resulting in an even more significant pain point to solve as a distributor,” says Access Hardware Supply Marketing Lead Shawn Nichols.
Nevertheless, distributors continue to step up and deliver. “We saw that some dealers and integrators had to cut back on staffing during the pandemic as projects were delayed based on the work from home schedule for many end users. Those companies took hits to their bottom lines, and with projects delayed margins suffered,” says Jenne Senior Director-Sales Dan Wild. “Consequently, some dealers/integrators have come to rely more on distributors for pre- and post-sales support, project and system designs, equipment staging, training and education needs, etc.”
Nichols and Wild are among the nine representatives bringing keen insights to SSI’s 2022 Wholesale Distributor Roundtable. Also featured are Rob Aarnes, president, ADI Global Distribution; Jorge Hevia, CMO, AlarMax Distributors; Jake Voll, president, SS&Si Dealer Network; Eric Mardian, vice president of marketing & business development, Southwest Automated Security; Brian James, vice president sales, networking & security, ScanSource; Clint Choate, senior director security market, Snap One; and Tara Dunning, vice president, global security, Wesco. They detail how their organizations continue to bring value regardless of volatility.
How have supply chain issues impacted your business and integrator customers?
Rob Aarnes: At ADI, we have a strong supply chain and logistics operation and we’re focused on providing our customers with access to the products they need, when they need them. And as our industry continues to experience supply chain shortages, like most markets right now, we are committed to working closely with our supplier partners to work to maintain appropriate inventory levels. ADI carries products from more than 1,000 suppliers globally, giving customers a wide array of choices and alternative options.
We’ve been working closely with our customers to forecast their needs and are encouraging them to order now and stock up. This will help ensure they have the products they need and may minimize any additional price increases from inflation. Additionally, on larger projects we’re encouraging our customers to get our team involved as early as possible, so we can help them secure all that is needed for the specific project.
Jorge Hevia: In some respects, supply chain issues have increased our sales, because we have superior levels of inventory versus some other distributors and dealers are calling around to see who has inventory of their products of choice. Another impact has been that dealer/integrators are willing to look at substitutes for their preferred product lines they install, if they can’t find them in stock anywhere.
This probably will pose a challenge to manufacturers, in the long run, as it has incentivized trial of competitive product lines. Manufacturers that have been and will be out of inventory for a long period of time will probably lose market share by the end of the supply chain shortage period.
Dan Wild: A shortage on key components and necessary accessories, such as mounts for cameras, has led to delays in project completions. In some cases, a shortage can cause a job to be lost to a competing vendor, which could result in a loss of revenue for the partner and the distributor.
Jake Voll: We’ve had to increase inventory on hand to give us more of a buffer. And we’ve advised our dealer partners to do the same. But even with the best planning, it’s impossible to avoid stockouts and backorders altogether. We saw some products on factory backorder for months — some without comparable alternative products. A huge percentage of our sales team’s time was spent communicating with our dealer partners to advise them of delays and ETAs.
Shawn Nichols: Product availability and lead times have been the most problematic issues. We have always offered our customers solutions, but usually they knew what answers they were looking for. As a result, we have had to pivot to identifying products with the shortest lead times that can suffice for an opening. It has been less challenging on our internal teams but a significant challenge to our business and, ultimately, growth.
Clint Choate: Availability, cost and customer demand have been a challenging trinity the past two years. Chipset availability, pandemic-related labor shutdowns and shipping delays have strained the supply chain and inventory. As a result of these challenges, nearly all industries have experienced cost increases. Combine that with soaring customer demand and it has been an unprecedented challenge — and our partners have given us very positive feedback on our management and communication around the situation.
Eric Mardian: The chip scarcity caused all sorts of secondary supply issues. The challenges were numerous given that boats were sitting on the water and couldn’t get to port. Forecasting became a thing of the past and all we could do was hope and pray. Suffice to say, prayers do work.
Brian James: More than anything, transparency within the channel has been imperative. Being able to fully understand lead times, supply constraints and inventory availability have been critical in helping our partners meet their end users’ needs. In some cases, our partners have had to look to alternative solutions. Thanks to our strong relationships with our suppliers and our wide breadth of products, we have been able to work alongside our partners to fulfill their needs or find a temporary solution while they wait for their products to be shipped.
Tara Dunning: Around the world, the pace of global digitalization and technology have advanced at a record rate. Over the past year, Wesco has responded by creating specialized global security sales teams hyper-focused on customers seeking a partner who can enable modernization and transformation of the rapidly evolving ecosystem.
Our expert and dedicated teams, along with our global technical services solutions group, are structured to support, advise and consult with partners globally and locally, whether they are security integrators, service providers, global end customers or solutions providers.
How has your organization been working with supply-challenged manufacturers?
Dunning: As a leading supply chain solutions and technology provider, Wesco is committed to helping customers respond to global supply chain challenges by increasing our on-shelf inventory availability based on local demands. We continue to build and expand our supply chain services offerings and digital capabilities to meet the needs of our partners while tailoring solutions based on customer requirements.
James: Having visibility into our suppliers’ supply chain challenges has been instrumental in helping our partners forecast and understand how they can fulfill orders in the pipeline. Flexibility and patience have been at the forefront for all members of the channel. Our supply chain team has done an incredible job in helping us to navigate these challenges.
Mardian: Providing our dealers and integrators with as much advance notice of supplier price increases. Placing stocking orders ongoing and in advance to avoid shortages. Scheduling planning meetings with key customers to forecast their product needs and react accordingly.
Choate: Snap One has leaned into more strategic partnerships with our suppliers, working to identify and remedy risks as early as possible. This spans production capacity/labor, component-level availability and lead times/supply, all while adhering to our high-quality standards. In many cases, our engineering teams have also been agile in redesign efforts to enable alternative components/sourcing where possible.
Nichols: We pride ourselves on the relationships we have built with our vendors. Constant and accurate communication is the expectation we set with our vendors, so we can be sure to treat our customers the same. Thanks to that level of transparency, and our drive to serve, not just sell, we have been able to keep our customers happy and in the green.
Voll: Supply chain challenges pushed our team to get better at communicating — with customers and vendors and with each other. We also learned to get creative — reworking bills of materials to meet the requirements of our dealer partners’ projects.
Wild: Jenne is in constant communication with our vendor community on a daily/weekly basis. This includes communication between not only our purchasing department and the vendor, but also coordination between the Jenne sales associates and the vendor sales associates. Sharing of information around key projects and current inventory is crucial to minimize disruptions.
Aarnes: Communication across the supply chain remains key to responding fast and efficiently to any situation. Our demand planning team collaborates regularly with both our suppliers and integrators to quickly identify any potential shortages and monitor inventory levels. We conduct an integrated business planning process with suppliers to understand their current inventory, secondary and tertiary component sourcing, and levels of production so that we can respond with additional safety stock or order expedites where appropriate.
Additionally, we’re staying closely engaged with our carriers to mitigate the potential for container availability challenges and port congestion.
Hevia: We have tried to work within a supplier’s product offerings to offer substitutes for the out-of-stock products, from the same manufacturer so they don’t lose the sale to their competitor and the dealer has limited retraining needs. In some cases, dealers are willing to trade up on a product, if it’s in stock versus waiting for their initially desired product solution.
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