One of the most challenging elements of COVID-19 has been the disruption of the international supply chain. IT supply chain issues, especially with hardware, can have long-lasting negative effects on your business. If your business fails to operate at its best, it will negatively impact relationships with your customers. All things considered, your customers don’t care if you are having supply chain issues – they expect to be taken care of in a timely fashion.
While the COVID-19 pandemic has caused serious disruptions in the IT supply chain, you don’t have to experience these problems again if you take action now. In this article, Sanity Solutions will cover specific steps you can take to better insulate your business from IT supply chain disruptions.
COVID-19 and IT Supply Chain Disruptions
While many industries have been affected by supply chain issues in some way, those dependent upon semiconductor chips were hit particularly hard by the pandemic. Unfortunately, semiconductor chips are critical components in many modern electronics.
Notable industries that utilize electronics with semiconductor chips include:
- Information technology (IT)
The semiconductor shortage was initiated by the first reported cases of COVID-19 in the Asian Pacific (APAC) region, where a majority of the semiconductors throughout the world are manufactured. During the second quarter of 2020, the APAC region instituted a series of lockdown measures, including strict stay-at-home orders, to combat the burgeoning pandemic. Semiconductor manufacturing facilities were shuttered for weeks and in some instances several months. The semiconductor shortage was exacerbated by a surge for work from home (WFH) measures and demand for cloud resources from the major cloud providers or hyperscalers such as AWS, Azure, and GCP.
This perfect storm of no-production and surging demand depleted the world’s inventory of semiconductors creating a tremendous backlog of demand. According to the website Tech Monitor, “the global chip shortage was prompted by the COVID-19 pandemic and the surge in demand for electronics…This rapid growth has continued in 2021…[in fact] sales for May 2021 were 26% higher than the same time last year.”
With such an unpredictable and volatile environment, businesses should insulate themselves as best as possible from IT supply chain shortages. This can be achieved through anticipating your needs such as scheduled hardware refresh rates and examining the potential of moving specific applications to a cloud environment.
Expect Delays in the IT Supply Chain
As we settle into an ongoing COVID-19 climate, you must anticipate irregularities and delays in your IT supply chain. These irregularities have the potential to affect relationships with suppliers and customers, as well as your IT budget.
Importantly, supply chain forecasting should always stick to the conservative side to ensure you don’t “overpromise and underdeliver.” In the end, honest and direct communication with your clients and suppliers is the best way to preserve relationships in these challenging times.
To better insulate your business from fluctuations in the IT supply chain, you should budget your IT hardware spend to account for larger purchases. By setting aside larger sums of money, you can buy critical pieces of IT hardware when they become available.
Maximize Your Current Hardware Supplier Relationships
Another extremely important practice to implement during IT supply chain shortages is to keep your relationships strong with current suppliers. Your key suppliers will be able to provide forecasts and insights into product availabilities and anticipated price increases.
Because they are experts in the field, your supplier can guide you on alternative ways to procure materials. According to Manufacturing.net, “Your hardware provider should also have in-house engineering experts to offer viable strategies and alternatives” for procuring IT hardware.
With engineering support, suppliers “can wade through specifications, performance, requirements, and more” to take a critical assessment of your needs. With this information in hand, you can make informed decisions on infrastructure, the use of multiple suppliers, or alternative parts.
Plan Ahead for Big IT Projects
The best way to prepare for big IT projects is to understand the anticipated lead times for delivery schedules for the required hardware. Your key suppliers will be able to provide key insights into the delivery schedules. Accelerating an acquisition timeline may not align with your internal budget. In this scenario, your supplier will be able to offer competitive financing alternatives.
Finally, it’s a good idea to develop a backup plan in case you can’t get the hardware you originally wanted. To illustrate, many companies will look to the hyper-scalers and examine the potential of moving specific applications to the cloud either long-term or as a temporary measure to bypass limited inventory availability. Now is the time to examine the potential for a hybrid architecture. A hybrid design injects agility into your architecture. Leveraging the public cloud you would have the ability to swing applications into the cloud and bring them back on-premise as your procurement capabilities allow.
Work with Sanity Capital
If you need additional funding to purchase IT hardware, look no further than Sanity Solutions. Our financing options available through Sanity Capital were specifically designed to help our clients insulate themselves against supply chain shortages.
With Sanity Capital, we work with you to develop a payment plan that makes sense for your business. In the end, it’s worth spending a bit more on interest to ensure you have the hardware needed to keep your business running.
Sanity Solutions also offers pre-staging warehouse storage options for bulk purchases of IT hardware. With this offering, you can buy in bulk when products are available and store the hardware as long as you need. At Sanity Solutions, we understand how stressful hardware shortages in the IT supply chain can be. Contact Us to better insulate your business from future threats.