February 02, 2022

Article
6 min

How CDW Can Help Customers During Global Supply Chain Challenges

The chip shortage has impacted suppliers, businesses and consumers across all industries. If you’re reading this article, you are most likely impacted by supply chain challenges yourself.

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By Daniel Reio, Director, Product & Partner Management – End Point Solutions

If we look at recent headlines around the global chip shortage, we see that the market isn’t slowing down, with demand surging despite increasing shipping costs and a container crisis, bringing major real-world consequences for just about every product imaginable. In fact, over 18 months into the pandemic, we reached an all-time high for backlogged cargo ships last November, which should continue to remain high for the next few months.

I’m sure that in the past year, many of you have tried to buy a new car, an Xbox, new furniture… and found that everything is harder to find. And even if you find it, you’re often faced with higher prices – there are no deals to be had. So, how did this happen? Well, at a macro level, manufacturers reacted to the pandemic in March 2020 by stopping production. Normally, when world issues like a pandemic occur, people would also stop buying products – but in this case, everyone started buying more, and demand for almost everything actually went up!

As you might imagine, this has impacted suppliers, businesses and consumers across all industries. If you’re reading this article, you are most likely impacted by these supply chain challenges yourself.

What’s been driving these shortages?

The driver behind these shortages was, in fact, the pandemic. Lockdowns shut down semiconductor chipmaking in key production areas like Japan, China, Korea and the USA. And trying to ramp back up, and then catch up, has been too much for the system. These factories cost billions and take years to build, so they can’t just quickly add more capacity.

Some of our partners like Apple, NetApp and Pure Storage make their own chips and are therefore less at the mercy of component manufacturers, but most depend on these core chips. One market dynamic we are seeing is that our customers are buying higher-end machines today, and the OEMs are happy to use their scarce computer chips in these higher-end models – but this means that lower-end models are lower in supply.

There is also uncertainty in supply as OEMs may focus their components on one product one week and another the next week, trying to catch up to demand. So what that means is you could buy something today and get it next week, but when you order it next week it may take two months to arrive!

And then, even when goods can be manufactured, it’s hard to ship them to their destination. Logistics companies have also been impacted (those who physically move goods cannot work from home), and they too are struggling to catch up and deal with high demand.

Key factors behind the shipping backlog:

  • Large container ships and other ocean-going cargo vessels are the primary way to move goods internationally. Ninety percent of what we buy arrives by ship.
  • During the first lockdown, capacities in manufacturing and shipping dropped, until the market realized that demand didn’t drop accordingly. So factories ramped back up, and overburdened shipping systems, which scrambled to ramp up.
  • With lower demand in past years, shipping companies had not been upgrading or adding to their fleets – so no new ships will be sailing in the short term.
  • Impacts from disasters – such as major storms and the ship stuck in the Suez Canal – can have massive impacts and take years for shippers to catch up.
  • Before 2020, transporting a standard 40-foot (12-metre) container on a ship sailing from a Chinese port cost about $1,000 – in December, those costs were up to $10,000.
  • Not just cargo ships – air freight costs are extremely high, as are train and trucking costs.
  • Quarantining, outbreaks and social distancing all continue to lead to lower available capacity and create a massive shipping backlog.

How the chip shortage is affecting our customers

The reality is the situation continues to be highly fluid and constantly changing. Under the current shortage, chips might get produced for cars one week, and PCs the next, so there is no such thing as predictable supply yet. While things may be getting better, some believe it will be years before they are back to normal.

In the meantime, customers may experience:

  • Longer lead times
  • Inconsistent ETAs
  • Lacking inventory
  • Increasing prices or lack of special discounts

So, how can CDW Canada help?

One of the benefits of CDW’s size and scale is the relative importance we have with not only our manufacturer partners, but also our distribution partners. For most of our manufacturer partners, CDW is their largest seller, and for our distributor partners, CDW is often their number one customer.

This means that we are well engaged at the highest levels, and through those connections and engagement, we can escalate your needs and get more than our fair share of product availability for all of you.

We also have an incredible team of service professionals and partners and offer a wide assortment of services. For our endpoint solutions, we offer imaging and Windows Autopilot deployment services, asset tagging, configuration capabilities, digital signage deployments, managed print solutions and can also offer professional and custom services.

Another benefit that CDW offers is our amazing team of pre-sales experts, who can understand your business and make solution recommendations, but more importantly, they can also make recommendations on product and solution alternatives that are more readily available in the market today. They have close alignment to our product management team and vendor and distribution partners and can align available solutions for your needs. This team also digs into the back orders for each of their assigned partners and proactively brings product alternatives to your account managers for them to bring to you.

The reality of the marketplace is that these supply challenges will not likely be solved in the first half of 2022. That said, we are seeing things starting to get better, which is a good sign. In the meantime, CDW has the capability to help you navigate these supply challenges. Your account manager or account representative can provide you with regular updates on the supply picture for products you purchase from us. And if you don’t have a quarterly business review in place with your CDW salesperson, now’s the time to ask them about setting one up. My team is more than happy to work with your sales rep to tackle any supply chain challenges you might be facing.