Sometimes it seems like the topic of every conversation has changed from “COVID, COVID, COVID” to “supply chain, supply chain, supply chain.” This is for good reason. Just about everything is in short supply, and prices are rising everywhere. The good news from this — the news that people are still spending money — gets lost in conversations about when we can get goods.
I wrote about supply chain issues earlier this year for rAVe, and like most things, as time has passed, we have learned more. The supply chain issues are amazingly complex. If you have an interest in what is going on with the supply chain, I highly recommend this article in the New York Times by Peter Goodman. Mr. Goodman does a fantastic job in this article of explaining the logjam that currently exists. In business school, we learned about logistics, and when companies have great logistical planners, (Amazon, Walmart) their businesses flourish. However, as you see from reading the article, the global logistics plans simply fell apart through the months of the pandemic. Decisions were made at the time that seemed correct, but in the end, led to only more problems.
Manufacturers can certainly learn from this article when thinking about getting their products around the world, and what are some options for doing so. Amazon, for example, actually looking to purchase used cargo planes so they can move their own products across borders (mainly from China) and avoid all the gridlock described by Goodman. Granted, most companies in the AV industry would not be able to make such a bold move, but there certainly are companies with the capital to be able to negotiate with individual transport companies to avoid these backlogs.
Beyond the physical movement of products, there is also an issue with actual shortages. Of course, the one affecting our industry is the chip shortage, and it has been long in the making. News sources report the chip market is not only in short supply but has seen an increase in demand by over 25% in the last quarter — a double whammy. This signifies that even as these manufacturers get their factories back up to 100% and then increase their capacities beyond that, the shortages are not going to be resolved anytime soon.
Rather than providing an economics lesson, the point of this blog is to think about what higher education institutions are going to do over the next year. If you have worked in the higher ed vertical, you know that we are gearing up for our big spending and installation season. We are starting to design our spaces, and within the next several months, we will be printing out purchase orders for all the equipment. However, this year is going to be different. We have already been told not to expect equipment to be readily available. Several of my colleagues have decided to clear their summer 2022 installation plans. Yes, that is right, they are planning on not renovating any rooms over the summer. Other colleagues are still planning to move ahead and have already begun to order their equipment. With these orders, customers are being told shipping dates that are in the late spring or early summer of 2022. In my opinion, those are guesses by manufacturers, and the sales reps should be honest about that with anyone ordering equipment.
Other schools, like my own, are in the midst of construction projects with classrooms that are planned to open next fall. Fortunately, capital projects are typically more forgiving of accounting that takes place across fiscal years, so much of this equipment was ordered months ago, knowing it could arrive anytime.
What this all really tells us is that the vast majority of classrooms around this country will look much the same coming into the 2022 academic year as they did during this academic year. So, how can manufacturers and integrators help?
One way is to be willing to make commitments on products to universities that are willing to work with them. If you are putting up new construction, you can’t just keep the existing technology — you need to bring in new stuff. By being upfront with these organizations about what products can actually have confirmed availability and then helping with design changes for products that won’t be available, integrators can provide more value to higher ed. We in higher ed then need to be able to make (monetary) commitments to get those products ordered.
Another opportunity for integrators may be to buy older equipment from schools that did update but haven’t gotten rid of their old equipment. With classrooms around the country aging, equipment is going to break. If new equipment is not available to replace that broken (and certainly older) equipment, used equipment would fit in a pinch. Some higher ed tech managers are already discussing creating this “secondary market” on their own. There does seem to be some value here for integrators and higher ed.