The AV industry is growing and, despite some segments underperforming, the overall outlook is very strong. At the Edge Spring Partners Meeting, Sean Wargo, vice president of market intelligence at AVIXA, confirmed this as part of his market analysis report. Integrators are reporting large backlogs, and plenty of new orders are on the horizon. Likewise, during an NSCA webinar this year, Dr. Chris Kuehl, chief economist and managing director of Armada Corporate Intelligence, shared the general feeling that any incoming recession will be one of short duration and quick recovery. This is great news, and it should put everyone in a good mood.
Despite all the positive signs and favorable news, manufacturers in the AV industry are expressing concern. They have not seen this directly correlating to their orders, and that has caused this year to be bumpy and for them to feel a bit underwhelmed. Yes, their goals are ambitious, but, considering all the talk of growth and good news, why shouldn’t they be? Unfortunately, with order numbers not backing up the sentiment, manufacturer representatives are starting to be questioned about their numbers.
A Response of Conservatism
At the Edge Spring Partners Meeting, we took this discussion to our membership, and the general response was one of conservatism toward early product ordering. In the not-so-distant past, integrators would set equipment order dates based on the site schedules for the projects they were working on. Those schedules, while not always accurate, were at least “in the ballpark” for purposes of inventory planning. For the most part, inventory would not sit on the shelf very long before moving to the project site. This approach became known as “just-in-time” ordering, which was adopted by everyone in the lifecycle of product delivery.
Let’s fast forward to today. Integrators’ warehouses and cubicles are full of boxes collecting dust. In many cases, there is a need for new warehouse space, and some integrators have resorted to renting containers and dropping them in their parking lot. As a lucky unintended consequence of the shift to remote work, those offices and parking lots are now at least available. Integrators order equipment based on when other equipment is going to arrive, as opposed to the project site schedule and availability. Today, the ordering process has been hijacked; now, it’s determined by the longest lead items, which most long considered the weakest link in the supply chain.
As projects wait, so, too, are the orders that the manufacturing channel is anxiously awaiting. The orders sit in integrators’ systems, floating somewhere between a proposal and a purchase order, waiting until the last component is ready to ship out. These orders may be a future order, an order-in-waiting or a preorder. Then, out of nowhere, when the purchase orders are cut, the manufacturer reps can breathe again. And when they do, hope is restored ever so briefly…until the cycle repeats.
Providing a Line of Sight
Providing a line of sight into future orders will help manufacturers shorten overall lead times, leverage economies of scale, possibly mitigate costs and even identify potential delivery issues. But how can integrators support the forecasting process so that manufacturers can get a better feel for not only what products integrators want but also when integrators will want them?
Is technology and software a viable option to manage distinct order processes, allowing integrators to place orders without committing to them? This would give manufacturers a better idea of what to expect regarding future orders and allow them to plan accordingly. By upgrading the current ordering process, we can create a more efficient supply chain that benefits everyone in the AV industry. Can manufacturers allow those “future orders” into their system without the commitment of a purchase? Do they have the resources for the upgrade right now?
The AV industry is growing, and the overall outlook is positive. However, manufacturers need help correlating order numbers to the positive industry sentiment. Is technology the solution? I am confident that integrators and manufacturers will come together to solve this problem, just as we have every challenge put before our industry. Let’s work together to take one more item off the “what keeps us up at night” worry list.
Mike Boettcher is president of Edge, formerly USAV Group and a division of the PSA Network, which provides unparalleled partnerships, bringing together low–voltage systems integrators and top AV manufacturers and services providers.
