Security Sales July 2021 - 10

INDUSTRY PULSE
IN DEPTH
Supply chain headwinds
blowing across the security
industry ecosystem can be expected
to persist into 2022, as a global shortage
of semiconductors continues to hamper
production of a wide range of electronics.
In fact, there are multiple forms of
chipset issues impacting the security industry
concurrently, Alan Green, director
of sales for Vivotek, tells SSI, which are
driving price increases and lower inventories.
These include a dearth of suitable
NDAA-compliant system-on-a-chips
(SoCs), coupled with the general integrated
circuit (IC) and component shortages.
" We've actually been able to hold the
line on pricing so far but have also had
to replace out of stock models with other
comparable or even more expensive models
at time, in order to help keep our customers'
projects on schedule, " Green says.
" Based on all of this, there has definitely
been margin pressure but we're doing our
best to minimize the impact to our integration
partners. "
The chip shortage is possibly at its crisis
point now with consumers and businesses
facing rising prices and shortages of products
including,
smartphones,
laptops,
TVs and games consoles, says Joon Jun,
president of the IDIS Global Business
Division. The automotive and industrial
sectors are especially suffering, mostly due
to their complex supply chain structures.
" So, relatively speaking, the surveillance
market has not been hit as hard as
many other sectors, nor did it experience
the same surge demand felt by vendors
of smart devices and home office setups
during the pandemic, " Jun says.
While the chip shortage appears set
to persist for the remainder of this year,
there is better news on the horizon for
the second quarter in 2022 once the U.S.
and Taiwan ramp up semiconductor production,
he adds.
10
NEWS ANALYSIS RESEARCH PEOPLE
Security Industry Grapples With Supply
Chain Woes by Rodney Bosch
For Fabiola Francisco, director of client
success at Condortech Services, establishing
customer expectations has been
imperative during this unprecedented
time. The Annandale, Va.-based integrator
has had a handful of projects adversely
effected, including long-delayed lead
times when products were not arriving as
scheduled. The delays, in some instances,
went from two to six weeks.
As an example, Francisco says the
dwindled quantity of certain GPU servers
by Nvidia has created a huge demand on
available supplies. " Planning and communications
can help mitigate a lot of the
struggles that we're encountering currently, "
she says.
Louis Boulgarides, president and
CEO, of Ollivier Corp., says his Los Angeles-based
integration firm has remained
mostly unscathed by the supply chain difficulties
- for now. Looking forward, he
views the near-term with a wary eye. He
too emphasizes the importance of proactively
communicating to customers: Get
your orders in to be processed; stalling
could result in footing higher prices.
" In my executive group, our leader
said, 'If you can't raise prices right now,
you can never raise prices,' " Boulgarides
says. " If you can't raise prices in the middle
of this huge inflationary period, with
costs going up, fuel prices going up, when
are you going to do it? "
A difficult factor in his decision-making
is the reality that many of the company's
customers remain under a lot
of financial pressure. Some have even
asked Boulgarides to discount what he
is charging.
" For large property management companies
and folks like that it is a delicate
balance. At some point, this is all going
to come through and impact us as a business.
How and where do we pass those
costs on to the customer? "
Security Sales & Integration JULY 2021
Microprocessor shortages are projected
to persist into 2022.
First Alarm in Monterey, Calif., is an
example of how the supply chain crisis
can disrupt a security company across the
organization. Equipment has been backordered
for months, some of which is
likely being redesigned due to the chipset
shortage. They have resorted to redesigning
systems that were already sold between
the contract being signed and the
installation starting due to unavailable
equipment.
" We have changed some of our standard
products to those that we know
are currently available and are told will
remain so through the rest of the year, "
explains Audrey Pierson, vice president of
sales. " Although as I'm sure many other
dealers do the same thing, it's possible
that their promise of long-term supply
may not hold up. "
All of this influences the company's
schedule as technicians are being retrained.
" I realize we're not alone in this. It's
across many industries. But it definitely
adds another layer of difficulty after an
already challenging year, " Pierson adds,
" just as sales are really picking up as the
world reopens. "
The online version of this story includes
additional reporting. Go to
securitysales.com/supplychain.
securitysales.com
TRYFONOV/STOCK.ADOBE.COM
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Security Sales July 2021

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