Laptops, monitors, webcams, and other work-from-home devices were briefly hard to find, but the IT supply chain showed its flexibility overall.
The consumer supply chain for toilet paper, hand sanitizer, cleaning wipes, meat, and many other food items took a wallop when the COVID-19 pandemic struck the US hard in mid-March, leaving many products still hard to find in early June. In comparison, however, the IT supply chain suffered some early shortages of work-from-home products like laptops, monitors, and webcams, but is turning out to be relatively solid.
That’s the conclusion of a recent CompTIA article, which found that initial concerns about the IT supply chain didn’t come true after the pandemic closed plants in hard-hit China, where many components and products are manufactured. The article, Why the Tech Supply Chain Held its Own During COVID-19, written by Scott Campbell of the CompTIA marketing team, described how initial expectations were–since the coronavirus originated in China, it would hit the IT supply chain hard due to the centralization of many IT manufacturers in the region.
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“But a funny thing happened along the way, a big shortage of tech products never materialized,” Campbell wrote. Interestingly, a study by the Institute for Supply Chain Management (ISM), which also includes non-IT supply chain respondents, found that some 75% of companies reported supply chain disruptions in some capacity between February 22 and March 5, 2020 as the pandemic was beginning. At the same time, though, business condition updates from some major publicly-traded IT distributors including Tech Data and Ingram Micro noted few significant supply chain issues during the period, wrote Campbell.
“The big surprise was we didn’t see the disruptions to IT supplies and components as much as people were expecting,” Seth Robinson, the director of technology analysis for CompTIA, said. “The global nature of the IT supply chain as opposed to the local nature of the consumer supply chain was part of that.”
One lucky break for the IT supply chain was that when the pandemic market pressures arrived, they mostly affected finished goods that were already well stocked, such as laptops, he said. And when the new devices went into short supply, many distributors could also rely on selling refurbished units, which helped the supply chain.
“The demand was in products that were already available in high volumes,” said Robinson. “It would have been more of a pinch with things that were available in low volumes. Then, by the time we were seeing stresses in the US IT supply chain, manufacturer’s factories were starting to come back online in China. We were beginning to see the end of the bubble and things were beginning to flow again.”
In its story on the impacts of the pandemic on the IT supply chain, CompTIA spoke with Frank Vitagliano, the CEO of the Global Technology Distribution Council, a trade association representing 20 of the largest IT distributors in North America and Europe that drive more than $150 billion in business annually. Many of the worst IT supply chain problems were likely averted because distributors typically have a four- to six-week supply of inventory in stock to handle changing market conditions, he said.
“So, when this hit, there clearly was inventory available,” Vitagliano told TechRepublic. The inventories included finished goods from vendor manufacturers, including Dell, HPE, Lenovo, and others, as well as in distributor warehouses and other sources. “Distributors were able to quickly work with the vendor community using very established processes that have been in place for years.”
The IT product shortages that did happen were not the result of supply chain issues but came due to extraordinary demand caused by work-from-home initiatives of thousands of struggling businesses at once, said Vitagliano. “If a company is moving 100 webcams a month and all of a sudden everybody on the planet wanted a webcam so they could do a Zoom call, then yes, that’s going to have an impact. Overall, the IT industry has done a really good job of making the transition to supporting work-from-home markets.”
The IT supply chain performance through June provides good evidence of how the IT supply chain will likely fare in the fall if an expected second wave of COVID-19 cases and closures occurs, according to Vitagliano. “Every time something like this happens, you learn more about what improvements are needed. They figured out what needed to be done and which processes they could leverage to continue to ensure the supply chain flowed. You don’t do that overnight. This is 40 years of learning.”
One thing that likely won’t be increased or changed to handle future IT supply chain issues are inventory levels on devices like laptops and other products, said Vitagliano. “I don’t see them stockpiling these things in the tech space. This is not like manufacturing paper towels, where the technology doesn’t change much. You can stockpile a year’s worth of paper towels and they won’t be outmoded. It’s totally different in the tech space with the rate and pace of change.”
Meanwhile, useful lessons have been learned from the pandemic so far this year, he said, such as how future IT supply chain concerns and issues could be mitigated more efficiently.
“Distributors are talking to manufacturers about things like looking at certain products within the supply chain where demand could spike unnaturally so they can prepare for that,” said Vitagliano. “It’s scenario planning, but it could go in different directions.”
Distributors have also reacted to the pandemic and its pressures by offering financial help to their partners who sell and service the products for end user customers, he said.
“They really came to the forefront,” he said of the distributors. “That is a message that people need to understand and take to heart.”