Tech Has a Huge Supply Chain Problem. When Will it End?

The IT supply chain issues that began with the first COVID-19 outbreak – all the way back in 2019 – are still at large. As a fully managed IT services provider, we’ve found ourselves stuck between a rock and a hard place ever since. Trying to source components, or even just trying to get accurate delivery times for our customers, has proven to be nigh-on impossible.

What is causing the supply chain crisis? How can tech and IT services continue to operate?

And when will it all end?

Trying to get hardware? Hard luck…

True story time. And if you work in tech, you might relate.

After what feels like a lifetime of planning, sourcing, and waiting – deeserve is happy to announce that our Private Cloud solutions at the Equinix MI6 data centre in Miami are up and running.

But getting to this stage was a huge challenge: not because it was a tough installation, or a particularly difficult setup (it’s been an amazing project, all this aside) – but because we just couldn’t get any hardware.

Hewlett Packard Enterprise was our supplier of choice, and historically, it’s been a great supplier. But, just like every other tech supplier and manufacturer, they’ve been hit hard by the IT supply chain crisis.

We first ordered some Aruba switches with HPE on 14th February 2022. Our ETA kept getting pushed back, missing every single deadline. After raising the issue with HPE, they couldn’t give us an ETA anymore – which meant that we had to cancel two booked flights, and miss two planned trips to Miami.

So we chased again, and got this response:

Please note due to supply constraints for the product  R8N88A in our internal factory, expedite request cannot be fulfilled at the moment against your order.

Based on current material situation and limited worldwide supply, an increased order priority won’t improve estimated ship dates.

Our factory procurement teams are monitoring closely the material situation and working to recover the material.

Many thanks for your understanding,

This secret shopper experience seems to echo our findings pretty closely, even if it is a smaller order – there’s a video that explains it in the link.

So – our plan after the first deadline had been missed was to make two trips to Miami: one to install hardware we already had (as a temporary solution), and one to install the switches when they arrived.

But the constant missed deadlines and zero ETA, even with increased order priority, forced us to move over to Cisco switches instead.

And even that wasn’t easy.

No matter where you go, the supply chain is in shock

To try to counteract the current shortages, we monitor stock levels at multiple vendors at a time.

We turned to Cisco, which had some similar switches – but even these were on an estimated 370 day lead time from the factory.

Lead times are horrendous, everywhere. Production is worse than ever.

In a letter to its customers, Cisco explains:

“Material shortages across the semiconductor industry as well as logistics challenges continue to impact supply chains globally, slowing output across multiple industries from automotive to consumer electronics and beyond. This has resulted in extended lead-times across many products and extended delivery dates.

Cisco continues to take aggressive action to increase supply. Our focus remains on meeting the needs of our customers in this challenging supply chain environment. We will continue to work closely with our network of suppliers and manufacturing partners to improve supply and

minimize the impact of extended product lead-times and, in some cases, recommitted dates.

We appreciate your continued patience and understanding and are making every effort to

maintain your trust and confidence during the challenging supply environment.”

The only way we’ve found around this is to find distribution stock.

We were lucky enough to find stock in the US – without Cisco’s help – but it came with a cost penalty; Cisco components are more expensive like for like, but at least we were able to move forward with the Miami project and provide a robust, high-quality solution.

And it’s not just server components

Lenovo ThinkPad laptops – the office and hybrid working staple machine – are scarce. Core i7 CPUs are difficult to come by in the UK once again, but distributors seem to have good stock of the Core i5 versions. For now.

Wireless access points from Aruba have been the same – and we’ve been buying stock whenever we see it. We’ve also had a Cisco Meraki WiFi access point on order since February, and the last ETA update was for December. In a bizarre twist, it arrived last week totally unannounced.

In the meantime, though, we installed a temporary Cisco Business AP to cover it.

It’s not just us with supply issues – this survey discovered that 71% of respondents are experiencing shipping delays of up to six months, and 52% have waited between four to 13 months. Up to 74% of organisations have cancelled their orders and reordered with another vendor, just as we have.

These delays are shocking, and they have made it hard to plan our work and service our day to day requirements. But so far, we’ve been able to use alternatives; existing stock, older parts, and temporary solutions that work well.

Not everyone has been as lucky to have the connections and alternatives in place as us – but even we can’t go on like this forever. So, why is this happening, and when can we expect to go back to normal?

What’s causing the IT supply chain issue?

Cisco cites “material shortages across the semiconductor industry as well as logistics challenges” as a fairly vague explanation; but what’s the root cause? Silicon is the second most abundant material on Earth – so is quarrying and mining the raw material the issue? Or is it manufacturing the raw material into giant crystals to form wafers?

Is it a lack of lorry drivers to deliver the goods?

Is it the dreaded B-word?

No. It’s almost entirely down to COVID.

Well… It’s actually down to processes that rely on human involvement, which were halted by COVID, and subsequently led to labour shortages. In 2020, people simply stopped working, across multiple industries, all over the world. And getting people back into work in the sectors most affected has been hard.

That’s because all the talent, all the labour – all of that human-powered industrial muscle was either forced to find work elsewhere… or, rather grimly, died of COVID.

There’s just not enough people working in these sectors to keep up with demand.

Like almost every other industrial sector, mining is being hit heavily by labour shortages in 2022. Manufacturing, however, is the single most affected sector, because it relies so heavily on all the elements required for a product coming together just in time.

Remember the great toilet paper crisis of 2020? That was due to the Just-In-Time inventory system, which discourages stockpiling in favour of a constantly moving conveyor belt of new material, factory processing, and stock rolling into shops.

This keeps costs low for businesses and consumers – but it requires a high level of coordination. If one link in the chain breaks, the system collapses immediately.

Manufacturing also relies on the Just-In-Time model, and China’s initial lockdowns were the first break in the chain for IT and tech manufacturing’s supply chain crisis. The lack of HGV drivers, freighters, shipping containers, and logistics teams has compounded the issue, but not by much; while delays continue, they’re still effectively half that of those faced by manufacturing.

And with China bracing for further lockdowns to cope with new strains and mutations of COVID-19, we could be back to square one again soon.

When will the supply chain stabilise?

We’re in a semi-stable, if slow state right now – deliveries and logistics are ramping back up. That makes access to existing stock quite reasonable, if you can find it – but any custom or specialist componentry is absolutely impossible to source at a reasonable lead time.

So, when will the biggest factor, the manufacturing sector, regain stability? Right now, it looks like the shortage in tech supplies will continue long into 2023.

We in IT have a choice now; we can wait for solutions that might get delayed again (or never arrive), or we can get innovative with older tech, and use what’s available until things improve.

That’s been deeserve’s approach, and so far it’s working out for us and our customers. Because the way we see it – it’s better to get on and run your business today, with pre-existing older tech, than it is to wait for the latest solution to arrive in 370 days (give or take a few delays).

On the plus side – at least there’ll be a little less e-waste to deal with for a few years!

Fully managed IT services – made for today

We’re deeserve – experts in fully managed IT services, and an IT partner to some of the biggest companies in the world. If you’re facing issues with supply, try us first. Our supplier network and alternative approach could help you get up and running faster.

Call us on 01509 80 85 86 or send your message to hello@deeserve.co.uk.

Posted on: 25th July 2022.