Distributors Offer Their Best Advice for Navigating the AV Supply Chain

There can’t be anything more frustrating than the current situation in the custom electronics industry. Demand is off the charts at historic levels, yet integrators are not able to fulfill that demand due to a lack of equipment. You can almost hear the sounds of hair being ripped from scalps!

Indeed, for many integrators, the constraints of the supply chain have felt like proverbial “chains of bond-age” holding back their revenues, growth, and potential success. As noted in the CE Pro 2022 State of the Industry Study, the inability to get products meant dealers on average were unable to complete an additional six projects in 2021. That equates to 13% more projects that they weren’t able to install and, more importantly, were not able to collect revenues on.

The news is even worse in 2022 in the home theater space, according to the just-completed CE Pro Home Entertainment Deep Dive Study fielded in April of this year. That data shows in 2021 and into 2022 that dealers say they were unable to do four additional home cinema projects, which come with median price tags between $27,500 for a multi-purpose room and $50,000 for a dedicated room.

For the industry’s distributors, the situation is just as upsetting. Yet distributors are pulling out all the stops to creatively help CE pros navigate through these unprecedented times with sage advice related to purchasing patterns, limitations on certain items to prevent hoarding, and easier methods to pick up gear and conduct transactions.

CE Pro reached out to several top distributors to get their take on the current situation, how they are assisting dealers, and when they believe the pressures on the supply chain will ease.

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CE Pro: What specific procedures have you implemented to help alleviate the supply chain crisis for integrators?

Helge Fischer: Communication! With everyone: manufacturers, dealers, homeowners, other suppliers they work with, past clients, and other distributors. While this may not be a “procedure,” it can help alleviate fears, pick up new ideas, share products and ideas and in general, it is just good practice.

Other more procedural things can be: Ordering early has helped and getting money up front more quickly from customers to help the cash flow.

CE Pro: When do you foresee the supply chain crisis subsiding?

FISCHER: Into next year, there should be a bit more of a return to normalcy. In the meantime, dealers need to look into alternative solutions, consider installing the product in phases and RMR services by including 24/7 tech support, certain free or discounted services — anything that can let their customers know that everyone is trying hard during this painful time.

CE Pro: How would you scale the supply chain situation today versus this exact time last year and why?

FISCHER: It is slightly better; the dealers and distributors understand — and to a certain degree their customers understand — there have been supply chain shortages across the board in multiple product categories, so their patience has been evident and appreciated.

CE Pro: What is the most important thing integrators can do in terms of their ordering, inventory, etc., to improve their own supply chain situation?

FISCHER: Consider installing the product in phases and produce more generic AV designs to make changing out equipment easier. Consider other revenue streams they might not have thought of getting into or were hesitant about; surveillance and cameras, lighting and lighting fixtures, and shading will continue to be hot product lines … did I mention communicate?!

CE Pro: What specific procedures have you implemented to help alleviate the supply chain crisis for integrators?

JOHN YODZIS: Our purchasing team has continued to refine its practices to optimize inventory levels to have products available for integrators while accommodating sell-through rates and shipping times. Given the current shipping times from overseas, we’re ordering an additional 6 to 9 months of inventory to minimize disruptions. In addition, our team evaluates substitute products that are available to fill holes for products that aren’t readily available. In some cases that means looking at new vendors or expanding the breadth of our inventory with existing vendors.

CE Pro: Have you implemented contactless payment for integrators?

YODZIS: In June 2021, we implemented our Rapid Pickup process to help get dealers in and out faster and minimize in-person interaction. We know the value of an installer’s time, so our process texts the customer when the order is ready and completes the payment on their credit card before they arrive. This way, the customer simply signs for the product and is back on their way quickly. We want them back on the job where they are making money. Our Smart Services program also offers courier service to keep installers on the job and minimize contact while getting the products they need.

CE Pro: When do you foresee the supply chain crisis subsiding?

YODZIS: Unfortunately, there are so many factors hindering our ability to get many products back in regular inventory and the collective intelligence from our vendors is that we will continue to see disruptions in available inventory, manufacturing delays due to staffing and component shortages, and extreme shipping constraints until at least mid-2023. Some categories (like TV panels) have gotten much better, while AV receivers are still difficult to source with any regularity.

CE Pro: How would you scale the supply chain situation today versus this exact time last year and why?

YODZIS: Better for sure, but still challenging. I would say we now know what to expect, so extra planning, longer forecasting, and staying flexible to take advantage of any opportunities or substitutions that do come up have become the norm.

CE Pro: What is the most important thing integrators can do in terms of their ordering, inventory, etc., to improve their own supply chain situation?

YODZIS: The best thing integrators can do is learn about substitute products from vendors they may not be used to purchasing but that will allow them to get their installations done. We know that not every product is going to be in stock, so hear out to your account manager to understand what products offer the same functionality and are in stock. We want to help integrators keep moving forward with installations and understand that homeowners are looking to get projects done on their timeline. Our team is looking to support project designs with in-stock solutions that get the performance integrators need.

CE Pro: What specific procedures have you implemented to help alleviate the supply chain crisis for integrators?

CYNTHIA MENNA: ADI has 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. As our industry continues to experience supply chain shortages, like most markets right now, we’re committed to working closely with our supplier partners to work to maintain appropriate inventory levels.

Communication across the supply chain remains key to responding fast and efficiently to any situation. Our de-mand planning team collaborates regularly with both our suppliers and integrators to monitor inventory levels and quickly identify any potential shortages.

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 when appropriate. Additionally, we stay closely engaged with our carriers to mitigate the potential for container availability challenges and port congestion.

CE Pro: Have you implemented contactless payment for integrators?

MENNA: Over the past few years, we have focused on service offerings that matched the “new way” that people were working, including contactless transactions, paperless billing, online returns, and more. Across ADI, we implemented a ‘cashless initiative’ last year where we no longer accept cash as a form of payment at the point of sale or on a terms account. In addition to ordering products, customers can use the ADI Digital Branch for account management. They can log into their account to see order history, track shipments, access quotes, view and pay invoices and submit online returns.

CE Pro: When do you foresee the supply chain crisis subsiding?

MENNA: We are expecting the supply chain disruptions and the uncertainties we’re seeing across the industry to remain throughout 2022, and we’ll continue to take every step possible to try and lessen the impact.

CE Pro: How would you scale the supply chain situation today versus this exact time last year and why?

MENNA: From 2021 to the present, our industry has endured numerous supply chain disruptions from logistics, to component sourcing and labor challenges. And at ADI, we took an aggressive approach early on to ensure we would have supplied for an extended period of time, however, the ability to acquire new product replenishments continues to worsen.

We have great relationships with our supplier partners and work very closely with them to align on forecasting, product supply, and inventory levels — and continue to keep our customers updated.

CE Pro: What is the most important thing integrators can do in terms of their ordering, inventory, etc., to improve their own supply chain situation?

MENNA: Many customers do not maintain warehouses and often buy per job to increase cash flow. But with the current supply chain situation, we are encouraging customers to buy now and stock up on their most installed solutions. This can help ensure they have the products they need and may minimize any additional price increases from inflation. And as forecasting remains key, we’re working very closely with our customers to forecast their needs, and help them secure the right products.

In today’s market, being educated and open to alternative products and solutions can be extremely helpful. ADI carries products from more than 700 suppliers, providing a wide array of choices. Customers can lean on our team to help them learn about alternative product options, and utilize our Systems Design Support and Herman Integration Services for help with job specification or on the actual installation.

It’s times like this that partnering with the right distributor becomes even more important. Integrators should think of their distributor as an extension of their team and encourage them to get our team involved as early as possible.

Lastly, communication across the supply chain remains vital, and integrators should be transparent with the end customer so they understand that there may be delays, and can accurately set expectations.

Click here to see the full story full of more advice from AV distributors.

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