Our Take on Supply Chain: 1 of 3 Major Challenges for Integrators This Year (Part 2 of 3)

Supply chain: 82.8% of integrators name lack of product availability and project obstacles as their most concerning challenge in 2023.

In the 2023 State of the Industry report developed by NSCA and Commercial Integrator and based on results from a survey of 150+ integration firm owners/operators, supply chain was one of the top concerns mentioned throughout the industry this year—along with inflation and talent (which we’ll discuss in another blog).

Over the past few years, integrators have been stretched to their limits as they faced unprecedented global supply chain challenges while continuing to perform mission-critical work for their clients—and that’s putting it mildly.

Although obstacles continue to persist this year, the industry has seen notable improvement overall in most areas and markets. For example, freight capacity continues to stabilize, and freight rates are normalizing. And integrators have been diligent about finding ways to make sure that these supply chain challenges don’t stand in their way of giving their clients what they need.

But this doesn’t mean supply chain issues are going away. In fact, some of the impacts will linger forever. Ernst & Young recently discussed what it and many others are calling “the great supply chain reset.” It predicts that the entire business model—from strategy, marketing, and design to sourcing, manufacturing, packaging, storage, and transportation—will be transformed and restructured.

What does this mean for you? Although we’re through the most difficult supply chain snarls, some of the best practices you established during those times should be carried forward to help your company continue to improve supply chain agility and resiliency. And if you haven’t implemented some of these yet, now’s a great time to start.

Update Your Proposals, Pricing, and Terms & Conditions

1. Shorten proposal expiration dates. Consider holding your price for 30 days or less. Honoring quotes any older than that can be too risky.
2. Consider escalation clauses that allow you to adjust prices during the contract based on material and other cost increases.
3. Create payment terms that will protect you. This could include a move away from progress billing, implementing milestone billing when working with end-users, and eliminating bill-upon-completion terms.
4. Request payment for equipment received in your warehouse—specifically the equipment not affected by supply chain issues. This prevents you from becoming your customers’ bank and may reduce the risk of customers canceling projects.

Set the Right Expectations with Your Sales Team

1. Create a plan at the start of each project and make sure the sales team shares it. Customers will appreciate knowing that you have a plan to guide them and handle issues as they arise.
2. Make sure sales teams review all terms and conditions so they’re fully understood before the project begins.
3. Address issues with customers directly. Let your sales team know that it’s okay to acknowledge how supply chain, inflation, workforce, or other issues may impact project success.
4. Provide your sales teams with a cross product/solution reference guide so they know their next move when certain solutions aren’t available.
5. Make sure sales and operations are in sync. Sales should clearly communicate client expectations to operations to gauge practicality.

Optimize Procurement and Operations

1. Create product ordering guidelines for procurement. Establish restrictions and safeguards based on delivery timelines from vendors. Optimize warehouse capacity by purchasing long-lead-time products first.
2. Work with vendors to extend warranties for equipment that cannot be installed due to a “missing component.”
3. Optimize subcontractor labor by making sure you adjust your cost basis and review quotes and agreements accordingly.
4. Identify equipment for work in process that might be needed to finish another project. Create a worksheet that allows each project manager to search and discover what they need to finish a project, and then negotiate for transfer of the equipment to their project. If you do this, track serial numbers, licensing provisions, ownership status, and other critical elements.
5. Capitalize on unexpected labor availability by making sure your operations team has a list of services and quick-turn projects that can be addressed when the opportunity arises.
6. If you are unable to include an inflationary price protection clause, add an internal working capital charge to projects that won’t start for a while.

Finally … Don’t Sit on Inventory You Won’t Use

NSCA has an online resource that lets you sell products you don’t need or want to other professionals who do need them. You can also use this site to locate specific products you’ve been looking for but haven’t been able to find.

It’s an exclusive place for integrators to do business with one another. You can post, search for, and purchase access control, AV, intrusion, fire, and video surveillance products.

If you’re selling:

Ask an underutilized staff person to list your unused equipment on StockroomExchange. For example, one NSCA member company successfully charged its receptionist with turning overstocked inventory into cash within a span of a few months.

To get started, just upload a picture, a product description, and your contact information. Your product will then be available for purchase.

If you’re buying:

Almost like a Craigslist for integrators, StockRoomExchange.com lets you browse for products you need and then buy them from other integrators.

You can contact sellers directly to set up payment for products and shipping. You’ll know who you’re buying from and can make arrangements that suit you both. If you’re looking for new, used, or refurbished products, StockroomExchange is a great place to start.

Visit www.stockroomexchange.com to learn more.