The AV industry has experienced profound challenges over the past few years with Covid disruption and supply chain issues that have impacted every area of business. Reece Webb finds out what role distributors are playing and how integrators can be supported through trying times.
A lot has changed in the market, be you an integrator or distributor or even an end user. Over the course of the pandemic, businesses didn’t just use AV systems, but in a lot of cases relied on them to function for everyday work.
This trend has not gone away, so are end users becoming more technologically literate? “Absolutely”, says Fabio Concezzi, president, Intermark Sistemi. “Historically, the message that we got from our brands was to spend our time with systems integrators and customers doing training and demos. We didn’t have many relationship with the end users.
“In the last five years, we’ve discovered that end users really want to understand the technology, they want to have proof-of-concept installation on their premises and our role has changed a lot from just a traditional distributor taking care of stock, delivery and prices. Now, we are in a more technical role than before.
We see that it is very important to understand the needs of the end user, and it is also important to offer more post-sale support: everybody wants to understand if a local distributor can quickly manage the warranties, product replacement and repairs.”
For Jon Tozer, project director, Holovis, post-sales support is essential to delivering a complete project in a world of uncertainty. Tozer says: “Post-sales support is so important. When we’re in the install and commissioning phase and a product breaks or is faulty, we have to get an advance replacement as we don’t have spares.
If a distributor can send you an advance replacement to meet a client’s deadline [it’s a life saver]. They get the pressure and they’re with us on that.
“We just want distributors and suppliers to feel the pain that we feel, as we’re on the frontlines. Ultimately, we can’t be the ‘bad guys’ when it comes to delivering disappointing news and unpredictability, because it’s not our fault. But through inaction and miscommunication, that’s how we become the bad guys.”
Changing tides
There have also been changes to the key players in the market. Companies, both large and small, have been bought by larger entities, all the while some companies from outside the traditional AV industry (such as Zoom and Microsoft) are making moves to expand their presence within the industry.
“Our customers are changing, they’re not just conventional AV integrators,” says Ennio Prase, CEO, Prase. “Many of them by now are IT integrators and we are investing into the IT segment. We are also seeing a growing number of AV/IT integrators. Most of the key AV integrators are owned by major IT integrators and the market is converging in a huge way. This has changed our profile.
We look at the market with a different pair of eyes because customers are asking for more support in pre-sales. We have to train and invest in our customers for them to invest in us. It’s a completely new game today; the pandemic played a small part in this as an accelerator. The IT guys didn’t expect all this business, and they grabbed it.”
Andy Evans, commercial director, Europe, TD Synnex Maverick, agrees: “There has been lots of consolidation in the market, and I think that will continue. You’ve seen that with us; last year we became part of the huge organisation, TD Synnex.
“I think that we, as a distributor, need to be broad minded in the market. We’re going to be putting extra focus on our portfolio; we know that Microsoft, Google, Cisco and Zoom are conscious that they need more vendors within their portfolio, which is a mutual feeling to address those market needs. You’re going to be seeing changes from us when it comes to portfolio expansion.”
Elephant in the room
Many integrators have been deeply affected by the ongoing supply crisis fuelled by major disruptions in the supply chain and the impact of Covid-related lockdowns in manufacturing hubs. Distributors too found themselves heavily impacted by previously unforeseeable disruption.
Evans adds: “The component shortage had an impact in quite a lot of our output. We are seeing considerable improvement in that lately and I think we will see continued improvement, almost back to normality by the end of this calendar year [2023]. “At ISE, I took the time to meet with a lot of our vendor partners and ask them if they are seeing improvement with supply. Some of them came out of it with a much better market position than others, and I had a positive response from all of our major manufacturers who are seeing much improved lead times in the market. We were fortunate that we put in some forward-thinking stocking orders so that we had good stock levels available through the past 12-24 months where it was challenging. Our stock levels now are considerably better than they have been before.”
“We have quadrupled our level of stock”, says Concezzi, “We have four times more products in stock than we had three years ago, and we are sending our orders out three months in advance. This is helping to grow our business. This has changed our business model, and we are aiming to spend a lot of time and energy in checking our stock, informing our dealers on what we have available. Every day, we will get the same question from integrators: ‘What do you have? I need to deliver a project in three weeks’. We are also starting to introduce promotions on products available in large quantities, offering discounts on products that are readily available. We have had systems integrators who were comfortable with one specific brand for audio, control and so on without being willing to look for alternatives. Today, integrators are much more open to change products [as a result of supply chain issues].”
"Distributors and integrators are both learning and having more open communication from distributors would help." - Katie Whitley, Design Integration
If there is one lesson to be learned from the past 24 months, it’s that supply lines can be severely disrupted, on a level previously thought impossible. Businesses will need to adapt to this new reality to survive.
Prase says: “For the first year, we made major investments in order to secure stock as we saw what was coming. We tried to mitigate a shortage with proper stock management. Of course, we have been facing this for two years and we couldn’t buy two years of stock upfront. We saw shortages, like everybody else, but less than others as we have been buying millions of products to supply our customers.
“Unfortunately, some integrators haven’t learned much from this experience. There are some who do not secure extra stock and blame distributors for failing to secure stock, however very few ask for additional stock [in case of shortages]. Most will collect new orders and buy what they need, but very few integrators are buying extra for future projects and post-sales, and this culture is still there.”
Tozer counters: “There are micro and macro factors that play into this such as cash flow, reserving products despite not having orders yet, lead times and so on. We have to be responsible buyers. Some suppliers may say that the integrator calls up and demands [a shipment] within four weeks as that is what they have committed to. Ultimately, we want to be good clients and there is client responsibility; we are respectful of that and believe that our clients have that responsibility as well. If we approach the issue with a genuineness to do the best job we can, with transparency throughout, then we’ll be okay.”
Changing the game
For some integrators, issues with stock have caused a radical rethink as Katie Whitley, purchasing co-ordinator, Design Integration, says: “Previously, we were very set in our ways in the kit that we’d use. We’d stick to certain brands because it was tried and tested, but of course, those brands were the ones that had the largest lead times. This forced us to look at other brands, not just ones that were available, but the ones that were as high quality as what we had been using.
“It’s opened up the minds of our designers to know that there are far more options out there than we were previously used to. The trouble is, that everybody follows that same route, so every integrator uses that product, and it becomes a problem item itself. It’s still a very uncertain time.”
"We have to train and invest in our customers for them to invest in us. It’s a completely new game today." - Ennio Prase, Prase
For some integrators, maintaining back-up stock levels can be an issue, especially for smaller companies with more-limited cash flows or warehouse premises that do not have the capacity to fit both stock for current orders and reserve products for emergencies.
Whitley adds: “It’s difficult to see an end to long lead times. The struggle at the moment is that [the market] is still volatile. Some products are readily available, then a week later, we see an increase of three/ four-week lead times. We may have promised to do certain jobs in that timeframe, which can make it hard to build up a level of trust in lead times. It is improving, but not significantly for us. Our biggest problem is that our warehouse isn’t large enough [for reserve stock]. We are moving to a bigger office with a much bigger warehouse, so we have lined up items that we are going to keep stock of.
“These issues have made us more cohesive as a company. Before, the sales team would work on a project, they’d pass it to the design and procurement teams, where stock would be expected for next week. Now, when we’re working on a larger project, there is greater cooperation with the procurement department so that they know they can meet demands. Everybody’s been struggling together, but it’s improved relationships.”
Evans adds: “With the world in global economic turmoil and what is going on in the east, nobody knows what is going to happen with the global economy and whether manufacturing will return to pre-pandemic levels without so much as a glitch. Our job is to try and protect today’s business. We need to have sufficient stock levels and forward procurement thinking that means that we have extended availability in a market where people will be buying those product sets.”
For those in the rental world, the Covid pandemic threw incredible challenges that severely impacted the sector, both in terms of business and available manpower.
Jesper Laursen, general manager, rental, AV Centre, commented: “Most of the gear for the rental business is specialist equipment, which has been delayed for delivery. We were talking with a distributor for specific equipment with a delay of up to 40 weeks. As a result, we are thinking of another brand to solve this problem, although the price can be higher which is another issue. The rental market in Denmark is small, so we have to rely on getting equipment speedily.
“A lot of the brands are almost religion for a sound engineer in the rental market. If he has been working with one brand, it can be hard to convince him to work with another brand. But if that brand cannot deliver, what can we do? It’s a big challenge to convert the in-house people to use a different brand to make ends meet. I don’t think the issue we face in rental is as bad as installation, because they have to look at price, whereas we can look more for the quality of the equipment and rent it out.”
Comms is key
Looking ahead, how can integrators and distributors prepare for the future? In uncertain times, communication is everything to keep ahead of the challenges faced by the industry as a whole. With the global supply crisis unresolved but improving, and awareness of the fragility of global supply lines, both sides need to prepare for any eventuality that may arise on the horizon.
“We demand more from distributors now than ever before”, says Whitley. “We expect that, if they cannot source an item, then we need to know what replacements are available. Our expectations are higher, but to the benefit of everyone. They will want to be our go-to distributor so they will have to supply what we need in both information and kit. Those needs are being met now.
“Distributors and integrators are both learning and having more open communication from distributors would help. If we know from the start that shipping dates could or will fluctuate, we can pass that information on to the client. We know that it’s not the distributor’s fault if the kit isn’t available, so as long as that is perfectly clear to us, then we can act accordingly. Most of the larger distributors are very good at that and everybody is moving towards that mindset, even if the lead time is six months. Keeping that open and honest relationship is the best way to improve.”
We face a very uncertain world. Though conditions in the market are improving, a general sense of cautiousness appears to be prevailing as we weather the challenges ahead.
"We just want distributors and suppliers to feel the pain that we feel, as we’re on the frontlines." - Jon Tozer, Holovis
Evans adds: “We try to take a look forward and see what’s coming down the line in the future so that we can preorder and pre-prepare for when the industry adopts new technology platforms or products that come through. It’s an interesting conundrum: have enough products to keep today’s wheels turning while looking forward to see where we can support our customers tomorrow to be as forward thinking as possible.”
“If our sales department foresees challenges on the horizon, they will certainly buy extra stock so that we can deliver from our own warehouse”, says Laursen, “In a few years, I think things will change.
“We are back on track as before Covid, especially our sales and installation brands, and the rental business is going the right way again. I think that we are reaching the end of the supply crisis, though there are other uncertainties such as the war in Ukraine. In the rental market, some of the big companies are waiting to see what is going to happen. There is still a waiting game to be played.”
Tozer closes: “We have a lot of transparency with distributors, but extra communication is key. What we want to do is ensure that nobody becomes a ‘bad guy’: so if a distributor has bad news, that’s okay, but we need to know as quickly as possible so that we can tell our clients to avoid miscommunication. “I really respect the role that distributors and suppliers play in the market; I know that they’ve got a tough job. I think that being open to growing positive relationships is the best thing that any distributor can do, because that breeds honesty, trust and mutual respect.”
Main photo credit: Marynchenko Oleksandr/Shutterstock.com