How have the global supply chain issues directly impacted the smart home industry and your business, specifically?
Hank Alexander, Director – HTSN, Nationwide Marketing Group: The supply chain challenges, specifically chipset shortages, have and will continue to impact the product roadmap likely for the next few years. It goes beyond the delays in getting product and the rolling impact on dealers’ on-hand inventory. We’ve seen added pressure on warehouses and extended lifecycles for products that typically roll out after a year. For HTSN specifically, it’s forced us to go out and forge new partnerships across the distribution network so our members can have access to the products they need, when they need it.
Robert Zohn, President and Founder, Value Electronics: Shortages of consumer electronic equipment have caused delays in completing many AV, home network, and smart home projects. We’re purchasing more than we need so we have inventory in anticipation for future jobs. In addition, prices have also been moderately increasing. Demand has greatly increased as families continue to spend more time at home. Their interest in home entertainment improvement has grown exponentially, creating more difficulties, and causing setbacks for consumers who want to upgrade their smart devices.
Mike Ranpura, Director, Smart Life Audio Visual: The supply chain crisis has massively impacted the way we do business, and our day-to-day running. In the early days, we had to make the decision to purchase and hold fast-moving lines of stock in inventory to ensure we had our usual lines of products to sell. As item lead times have gotten worse, we’ve started holding more inventory than ever before.
Nick Caripis, Founder, BNC Technology: The global supply chain shortage has definitely impacted our business, but not as much as most. Longer lead times and stock discontinuation play a role in not completing a project on time.
What do you expect to return to the way it was before, and what do you think has changed irrevocably?
Hank Alexander: I think we’ll eventually see the industry get back to more of a traditional product and pricing roadmap. Right now, especially in the panel business, things are very much out of whack. By this time next year, I expect prices will normalize and the traditional promotional periods (like Black Friday) will come back into play as key tentpole events for the industry.
On the flip side, we’re living in a new era of client or customer engagement. The past two years have seen consumers truly discover how to self-educate, and they’re coming to us knowing exactly what they want. The challenge becomes how to get your business in front of them during that self-education process. Custom integrators finally understand, or are willing to learn, how a website can market their business and connect them with the design and build communities.
Robert Zohn: I expect we’ll see availability of equipment improve, but prices will likely continue their moderate, but steady increase as supply chain manufacturers face higher production and transportation costs.
Has the semiconductor chip shortage affected your business? In what ways?
Hank Alexander: The chipset shortage will likely be the biggest influence on this industry out of the pandemic. We’ve seen the first-hand effects of manufacturers having to rewrite their product roadmaps and delay new introductions because they couldn’t get their hands on chipsets or because they had to rewrite firmware for the chips they could get. Our industry probably lost about 18 months to two years’ worth of innovation. Some brands are just now starting to catch up on those promised new products.
Robert Zohn: Shortages in SoC are the most relevant reason for all electronic equipment shortages. I’m very happy to see MediaTek open research and SoC manufacturing to the U.S. this year.
When do you see improvements to the current situation?
Hank Alexander: The supply chain is slowly but surely starting to self-correct. We’re probably looking at early 2023 before we can start talking about getting back to “normal.” With regards to the chipset challenges, the runway is likely a little bit longer. We’ve heard of a few manufacturers securing land to build chip-making plants here in the U.S. The earliest they’ll be up and running is maybe 2024. Thankfully, the U.S. government recently passed legislation (the Chips and Science Act), so it seems some relief is on the way.
Robert Zohn: Supply of most consumer electronics has just started to moderately ease up, which gives us the opportunity to stock up, so we have inventory on hand for new jobs as they come in. Prices are still on a slow but steady incline, and newly launched products are delayed and limited in availability.
Most CE manufacturers have made progress in production and transportation to get the finished product supply and distribution channels better stocked and prepared for the strong market demand.
How has your business addressed these issues with your clients to manage their expectations?
Mike Ranpura: We’re very up front from the first conversation with new clients. We provide an estimated date but stress it’s still an estimate. Prior to the crisis, we would order equipment a few weeks before we needed it to ensure clients could benefit from the full warranty period. Now, we order equipment the moment the specification has been agreed and the contract has been signed. Clients have been surprisingly understanding, as delays haven’t just affected our industry.
Nick Caripis: The way around this is to design systems with stock availability in mind or alternatively, let customers know of the long lead times and try push the project forward from a procurement perspective. We are very project-based and do a lot of long-term to medium-term projects, so our customers are prepared to wait for the correct quality or technically correct product.
What advice would you have for other integrators to help maintain positive relationships with clients at this time?
Mike Ranpura: Be extremely clear and set client expectations as soon as possible. Reiterate all the cool functionality they will be gaining once the system is up and running. Keep them informed of updates from your suppliers so they aren’t in the dark about what’s happening.
Nick Caripis: Communicate and see if there’s an opportunity to share stock and work together to make all of our customers happy. Other than that, we encourage our customers to wait for the product we’ve recommended. We don’t believe in rushing to install an inferior product just because it's the only thing available.