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Farpointe Data’s Response to Supply Chain Challenges
By Dexter Corpuz, Operations Manager, Farpointe Data
As must be evident to just about everyone, the world continues to battle with the economic disruption of supply chain issues. These issues impact nearly every segment of the economy. While much of the disruption was indeed pandemic induced, pre-pandemic situations—the trade war with the Peoples Republic of China—compound the problem. Additional developments, such as the blockage of the Suez Canal and Russia’s aggressive invasion of Ukraine, served to create ripe conditions for the global supply chain crisis.
Global Supply Chain Disruptions
While supply chains serve as the backbone of global commerce, the ease with which the COVID-19 pandemic dismantled them revealed their weakness. Today’s issues can be attributed to a domino effect that occurred in response to the pandemic:
- Government-mandated shutdowns greatly slowed the production of goods and the delivery of services, and the active workforce began to shrink.
- Businesses began to reopen, but health and safety protocols reduced productivity, with demand in certain sectors exceeding the ability to supply.
- When businesses reopened, they found themselves ill-equipped to handle the surge in demand, exacerbating product and labor shortages.
Effects from the initial shutdowns in 2020 continue to ripple around the globe. Work stoppages brought about significant changes to the workforce. Layoffs, early retirements, and career shifts introduced labor gaps that did not fully manifest themselves until well after businesses began to reopen. Due to the shutdowns and quarantines, inventories of everything from treadmills and bikes, to kayaks and camping gear, were being depleted. Even RV sales lots stood empty. The booming business for some manufacturers—and the resulting logistics woes—offered a glimpse into the supply chain obstacles that nearly all manufacturers would soon face.
As operations began to reboot in 2020, many companies instituted work-from-home (WFH) policies, challenging many employees to adopt (if not embrace) unfamiliar remote work patterns that initially hampered productivity. For workers that returned to the office, new protocols put in place to help protect workers’ health—such as social distancing and sanitization procedures—also helped to slow the pace of production. Just as global commerce began to awaken to an increase in demand, new waves of COVID infections forced subsequent quarantines and work stoppages...and the perfect supply chain storm began to form.
As vaccination rates climbed throughout 2021, a sense of optimism should have accompanied the stability of more and more businesses remaining open. However, a variety of factors—one of the most prevalent being the WFH movement that started in 2020—created unanticipated spikes in demand that businesses were ill-equipped to meet. Overnight, households became epicenters of remote work and remote learning, requiring upgrades to computers, smartphones, tablets, routers, modems, video conference lighting, and more. The high demand for consumer electronics strained semiconductor manufacturers already battling with the dual challenges of capacity and labor shortages.
What was predicted to be a slow, gradual upswing of the economy became a quick, dramatic recovery, with which businesses could not keep pace. Labor shortages in manufacturing were aggravated by those sustained in areas of logistics. The impacts of clogged shipping ports, overcrowded warehouses, and trucking delays reverberated around the world and, in some locations, continue to do so. Many manufacturers simply can’t get the necessary component parts from suppliers to complete production. Others find it difficult to hire enough workers to fulfill orders in a timely manner. The few with the good fortune of manufacturing at full capacity face logistics bottlenecks that slow the movement of finished product into sales channels.
Demand is outpacing supply, leading to inflation. Shipping costs—already aggravated by the logistics snafus—are elevated further by soaring energy costs, leading to even higher prices and rising costs simply not seen in decades. Events over the past years—drought in east Asia, blockage of the Suez Canal and Russia’s invasion of Ukraine, as examples—have only added fuel to the supply chain fires.
Supply Chain Issues in the Electronic Security Industry
The electronic security industry, which relies heavily on international supply chains, is facing the same global shocks that have sent tremors throughout every industry. Labor issues and component shortages are creating major supply chain disruptions for manufacturers and security integrators alike. For example, who would have thought the leading vendor of readers and credentials for electronic access control would run out of stock on multiple core offerings with delays expected to last months? Just a few years ago, such thoughts would’ve been inconceivable. Today they’re almost expected.
When a vendor of this size cannot deliver, integrators and dealers—who are awash in new business opportunities but can’t supply and bill—are now seeking product alternatives.
Farpointe Data’s Efforts to Combat Supply Chain Issues
As the ongoing global supply chain issues continue to challenge our industry, we are no longer surprised to hear reports of business shutdowns, out-of-stock notices, lead times measured in months, and order premiums. Let’s be clear, Farpointe is not immune from the very real supply chain challenges driving many of these reports. Fortunately, challenge is not new to Farpointe, and neither is our appreciation and respect for our supply chain partners. Open and transparent communication is at the heart of any solid relationship, and Farpointe has worked hard—for years, pre-pandemic—to build strong relationships with vendors and partners alike. The supply chain issues of today only reaffirm this commitment.
Farpointe’s operations team has taken the lead with a multi-faceted approach to navigating today’s supply chain issues.
- Increased engagement: With regular scheduled meetings and previously agreed agendas, twice a week we meet with our suppliers to address their challenges, and how we at Farpointe can support them. We also boosted internal communications, socializing cross-functional discussions across engineering, finance, and sales, to better anticipate challenges and respond quicker to mitigate customer impact.
- Maintained flexibility: We provide extended forecasts to suppliers, expanded our inventories, stocked strategic sole-sourced components, paid premiums for material substitutions, modified shipping arrangements, and more, to keep key materials flowing through production in a timely manner.
- Enhanced communications: Since May 2020, Farpointe has been providing a weekly product lead-time update email. This message is sent to its access control system partners with the goal of providing timely, honest and accurate insight into Farpointe’s current lead times on key products.
The results of Farpointe’s efforts are best illustrated by its product lead-times, which are measured in just days and weeks, as opposed to months. This is a testimony to not only to our internal staff, but also our entire supply chain. Everyone—from our sales and customer support teams to procurement, operations and engineering, as well as our suppliers—work together tirelessly to combat today’s supply chain challenges.
At Farpointe, we understand and appreciate the trust placed in us by our partners and their customers. We will continue to work the challenges and supply to the very best of our abilities.