Recent supply chain problems highlight the need for resellers to keep talking to vendors, says D-Link’s Neil Patel
Rising demand for network and connectivity products driven by new technologies and new working practices helped D-Link to achieve a double-digit increase in UK sales in 2022. However, sales could have been even higher had it not been for well publicised IT industry supply chain problems caused by a multitude of factors, from Brexit and Chinese Covid policies to the war in Ukraine.
Neil Patel, Director of European Marketing and Business Development at D-Link, got a flavour of what was in store this time last year when he attempted to send EMEA team members a Christmas hamper full of delicacies from across the region, including crisps from England and Scottish shortbread – only to be thwarted by Brexit-related bureaucracy.
“We couldn’t send them abroad because Spain wouldn’t accept the crisps and Germany wouldn’t let in the shortbread. There’s no such thing as an easy delivery anymore. Everything has become so cumbersome.
“People still have the mindset that they can order something and it will just come in. But our warehouse is located in Holland and something that used to take five days to arrive can now take two and a half weeks due to a lack of clearance or a lack of capacity.”
Brexit is not the only complication. Supply chain disruption linked to the pandemic and exacerbated by the war in Ukraine is another difficulty that D-Link, like other vendors, has had to contend with over the last 18 months.
“Logistics is a big challenge, with component shortages and component vendors and manufacturers going ‘Look, I can give you such and such a product, but you will have to wait for it’. One vendor quoted me a 100-week lead time and then added: ‘It’s 100 weeks, but if you pay 25% more, I can get it to you in 40 weeks’.”
Other dubious practices include supplies spoofing (or stock bait) where suppliers entice visitors to their site by advertising quantities of a particular product that they don’t actually have in the hope that they will be able to sell them an alternative; and advertised prices bearing no relation to the true cost of a product that are just there to draw traffic to a site.
Patel adds that these problems are compounded by a lack of planning on the part of resellers and end user customers.
“Much as we live in a global world, with access to global information, at the end of the day everyone lives in their own bubble and doesn’t consider how things can impact them. A partner, not from the UK, recently turned around and said ‘I want these Nuclias devices delivered next week’. And it’s like ‘Whoa, we didn’t know you needed it because you haven’t told us that you needed it’. People expect stuff to be delivered immediately but if they don’t engage with suppliers early enough, they won’t get allocation, they won’t get what they need and they won’t get it at the price they want. Partners and even end user customers are still under the impression that they can just pick the phone up and go ‘Oh, I can see it on XYZ, let me just order that and wait for it to be delivered’.
Patel points out that supplies shortages are easing now, but even so he believes events of the last 18 months have produced a long-lasting, fundamental shift in supply chain capabilities.
“I think we’re going back to the situation six, nine, probably closer to 20 years ago when we didn’t have seamless logistics or that expectation that something you order this afternoon will be on your doorstep the following day. To make sure you get what you need, you have to plan, schedule a delivery date and agree a price. This is the situation we now have in the UK and elsewhere.”
This, he says, applies equally to customers wanting industrial routers for large, long-term smart infrastructure and smart city projects – a growing area of focus for D-Link – and smaller resellers at the SMB, small public sector level (e.g. schools) where D-Link has traditionally been strongest, who tend to operate on an ad hoc basis and rely on a conveyor belt of projects for revenue and cash flow.
“D-Link’s whole ethos is to be approachable, to be always available, so if you need somebody to come with you to see a customer, we have somebody who will do that; if you need help planning a network, we’ve got people to help you do that. That level of approachability gives us a quite unique market positioning and it’s something we take great care to maintain, but even we may not be able to meet your needs if you suddenly hit us with something out of left field and say ‘Hey, we need this product tomorrow’.”
So, what advice does Patel have for partners?
“Just keep talking to us. Engage early; tell us what you need; tell us when you need it. A lot of resellers are very reticent to do that, but doing so gives you the right pricing, it gives you protection for your project and, more importantly, it gives you stock allocation. Those things are absolutely key to retaining customers.
“With small run rate deals, it helps us make sure we’re ordering the right quantities and have the right stock availability. And for partners that are working on large projects with multiple different products – switches, wireless routers etc. – and different licences, it gives a level of security and confidence that they will be able to retain the customer, retain the business, retain the project.”
These problems have been a big frustration for D-Link because, as well as interrupting larger smart city projects, they have impacted growing demand since Covid to upgrade office and public sector infrastructure, including schools.
“They make evolution of technology much harder. As we move from, say, Wi-Fi 5 to Wi-Fi 6, Wi-Fi 6E or Wi-Fi 7 and 2.5/5/10 Gigabit switches, we are dependent on having early access to chips, but if you can’t get the chips because the fabs are closed or because they’re focused on other things, customers who want to move to those technologies are having to wait longer. It’s the same in the home, where we’re seeing a huge push from legacy Wi-Fi 5 mesh systems to Wi-Fi 6 products offering enhanced connectivity.”
Despite these problems, which have eased but still not fully gone away, D-Link has continued to perform strongly, following UK growth of circa 30% in 2021 with strong double-digit growth in 2022.
“Our managed service provider business, that cloud-managed infrastructure, is still extremely buoyant. We’re seeing huge growth rates in the public sector, because school infrastructure is now being upgraded. We’re seeing a growing need for reliable connectivity via a mobile connection and, as we move to more permanent hybrid working, certain sectors want to be able to deploy a low-cost backup connection. For example, at home I’m plugging in one of our 5G routers so if the internet goes down or becomes very slow, I have a 5G failover capability. That, too, is a major growth area for us. We won a deal recently with a company called Quickline, which is putting our routers into rural areas. In addition, there’s a growing requirement to build local 5G infrastructure in hospitals for connected devices and reporting. So we’re seeing a two-pronged approach, Wi Fi or 5G, to address the different applications our customers have.”
Meanwhile, remote management of devices through Nuclias Connect network management software and Nuclias Cloud cloud-based remote management is helping customers tackle other challenges, such as security and energy efficiency.
“Two of the things Nuclias Cloud lets you do, which is driving our cloud growth, is improve security and consume less power by turning off devices outside working hours, say 8 a.m. to 7 p.m. It gives you the ability to power down switches at 7 p.m. and then fire them back up again at 7.55 a.m. Our devices don’t consume a lot of energy, but even these little savings can make a difference.”
Whatever fresh challenges 2023 throws up, make sure you are first in line for stock allocations and favourable pricing by planning ahead and maintaining a dialogue with key vendors like D-Link.