The world is becoming smaller, with globalized manufacturing and distribution improving access to products in depth and breadth. And, for commercial AV, the value of global logistics and supply-chain expertise has never been more essential to supply customers with what they want, where and when they want it. Post-COVID-19, there has been a protracted period of supply-chain disruption that calls into question just-in-time (JIT) supply chains.
Pre-Pandemic JIT Environment Within Commercial AV Distribution
Before the pandemic, the JIT system was in constant motion, a cornerstone of the model. Manufacturers relied on ample source materials, a large workforce pool and quick transport. Distributors could capitalize on low manufacturing and inventory costs, steady demand and readily available labor.
Meanwhile, integrators benefited from uninterrupted access to global commercial AV inventory with low warehousing costs. Integrators also had easy access to certified commercial AV technicians to support the low-volume/high-complexity installations of legacy commercial AV systems.
When each link in the supply chain is operating at capacity, this model leads to improved working capital for everyone. And, as a recent TechTarget 1 article explains, leaders long held up the just-in-time supply-chain model as ideal. But leaders are now reimagining supply-chain models after the pandemic exposed the vulnerabilities of interdependency and reliance on operational continuity from end to end. Leaders are mitigating the risks and responding to the new environment.
New Challenges in Global Commercial AV Distribution
The global supply-chain disruptions, combined with new norms, have caused some commercial AV supply-chain leaders to redevelop their processes to meet these challenges to thrive in this new environment.
Nearly everything the JIT system depended on has changed. As outlined in a January 2022 National Institute of Health article2, the uncertainty of global disruptions led to personnel shortages due to health and safety shutdowns, which caused decreased inventory access and bottlenecked distribution ports; and that snowballed into supply scarcity and slowed manufacturing, which in turn drove supplier consolidations and thus a smaller marketplace.
While these front-end supply-chain links slowed amid challenges, end-user activity picked up. Demand increased for goods, including new collaboration systems to support remote and hybrid workers. These new systems support user expectations driven by the simple video collaboration experienced during remote work. End users no longer tolerate the once acceptable connectivity hiccups as their familiarity and technical maturity increased through the rise in videoconferencing3.
Pandemic-related inflationary pressures have added to the supply-chain challenges, increasing the cost of materials, storing products and shipping goods4. It’s clear how these obstacles add up to a breaking point for the JIT supply chain.
Commercial AV Distribution in the Post-Pandemic Environment
As the pandemic-related disruptions in the global commercial AV supply recede, certain challenges persist. Demand remains high as customers reinforce infrastructure and connectivity while supplies haven’t fully replenished. This imbalance creates a price spike where availability will cost a premium until the supply-demand equilibrium returns5.
Along with these increased costs, commercial AV manufacturing is moving away from direct-sales models in favor of distribution. Support from distribution helps shield them from the cost of delayed payments, bad debt expenses, wasted time chasing P.O.s and spending resources on goals that are auxiliary to their core business.
Also Read: Risk-Mitigation Strategies for the Supply Chain
Realizing the importance of better planning and preparation against future global disruptions, manufacturers are seeking distribution partnerships that go beyond simple product distribution. To drive efficiency and profitability, they are turning toward distributors that can provide supply-chain solutions and value-added services. These comprise technical consulting or labor-saving project solutions.
Furthermore, these robust global distribution partnerships offer manufacturers a greater footprint and accessibility than they may be able to achieve with their footprint. By carrying less inventory and relying on a distribution partner, channel partners can improve working capital and ensure fulfillment.
Coming Out Ahead: Global Commercial AV Distribution Partners
The pandemic could alter supply chains, as firms shift their sourcing strategies to build resiliency6. An article from the International Journal of Production Research identifies “intertwined supply networks” as a new supply-chain framework that can safeguard the system’s viability (defined as “the system’s ability to meet the demands of surviving in a changing environment”)7.
Commercial AV distributors with global reach, logistics, supply chain and value-added services expertise are well positioned to support manufacturers and integrators in this environment. As inventory providers, global distributors offer a safety net against inflationary pressures by operating in different international markets with access to supplier inventories worldwide. Buying from a few trusted distribution partners, rather than sourcing from a long list of manufacturers, saves time and money. Distributors also provide scale and services that streamline deployments, helping integrators to lower costs and enhance profits.
These advantages deepen commercial AV relationships across the supply chain and allow manufacturers, distributors and integrators to focus on what matters most to their customers.
- https://www.techtarget.com/searcherp/feature/How-COVID-19-has-affected-just-in-time-supply-chains
- https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8776498/
- https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7280091/
- https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7147532/
- https://www.anamariasantacreu.com/uploads/6/0/4/2/60420525/santacreulabelle2022.pdf
- https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8776498/
- https://www.tandfonline.com/doi/full/10.1080/00207543.2020.1750727
Phil Langley is senior vice president, Global Pro AV and UCC, with Wesco.
