Special Delivery: Supply chain and the virtual trade show
Two areas of the security market under extra scrutiny are product availability and connecting with customers online
May 7, 2020 By Alanna Fairey
The novel coronavirus (COVID-19) pandemic has had significant impact on the world at large — including the security industry.
According to Memoori’s report, “Coping with COVID-19: Potential Impact on the Physical Security Industry,” the forecast for 2021 will ultimately depend on how the measures to control COVID-19 take hold.
The report states that if the pandemic is under control by September 2020, world sales of physical security equipment could return to growth by the second quarter of 2021.
Reflecting back on SARS, Ebola and the 2008 recession, Danielle van Zandt, security analyst for Frost & Sullivan, noted that certain areas of security received more attention and more spending rather than a decline.
“Do I think that the market cycle will be different? I think it depends on how and where the security product is being sold to,” van Zandt said in an interview with SP&T News.
“A lot of public sector markets right now are probably the one area where any new projects could get off the ground…everybody else is kind of in this state of pause until the market comes back.”
Chris Larocca, CEO of Nortek Security & Control (NSC), shared that from a supply chain and production standpoint, the company has not faced much of a hiccup other than having to spend a few extra dollars to airship product due to the shutdown in China.
“Our teams, factories and vendors in China are back to almost 100 percent, and product is flowing consistently again from China,” Larocca said. “Our team did a great job of bridging the gap created by the early China shutdown and has delivered significant product to the U.S. We mitigated about a month of ocean freight shipments by air shipping to the U.S.”
Larocca added that one of the more noticeable disruptions in Nortek’s supply chain and production was when the company faced a one-month delay related to the shutdown in China back in February, which involved getting workers and vendors back to full capacity.
“Other than the increased freight charges, we have been able to maintain our supply chain and have plenty of inventory,” Larocca said. “We’ve been able to keep inventory levels pretty consistent to where we normally run and operate.
“If customers, distributors or installers need product, we’ve got it domestically. We really haven’t seen much of an impact other than some additional logistics costs.”
Vaughan, Ont.-based fire alarm and security service manufacturer Mircom Group of Companies also saw very little disruption in their supply chain when COVID-19 broke out.
Maintaining a distribution facility down in Niagara Falls, N.Y., Rick Falbo, Mircom’s executive vice-president of business development, shares that the flow of goods between Vaughan and New York State has been largely uninterrupted thus far.
“At this point in time, we do offer service right across Canada,” Falbo said.
“We’re anticipating that this trend is only going to get a little worse through the month before things get better.”
With a fairly large service offering right across Canada from coast to coast and down in South Florida, Falbo shares that a number of property managers and owners are hesitant to have outside providers like Mircom come on- site, resulting in a number of postponements for annual inspection work.
Surprisingly, according to Falbo, Mircom’s 40 technicians working in the Florida facility have reported that the facility has not been impacted to the same degree as Canada.
“In Canada, we’ve been impacted in the 20-30 per cent cancellation or postponement range approximately, whereas in Florida, it’s probably more in the five to 10 per cent range in terms of postponements,” Falbo shared. “I’m in daily contact with my branch managers across North America and I was surprised that Florida hasn’t seen the same impact that we’ve had up here in Canada.”
While Florida seems to be less affected, Falbo added that New York City and New Jersey — where a large swatch of Mircom’s U.S. business is based — has been heavily impacted by the pandemic.
The virtual show must go on
Installations and business transactions are not the only activities being postponed as a result of COVID-19 — tradeshows and events have been cancelled and rescheduled since the outbreak.
With show organizers being forced to postpone or shutdown tradeshows, security equipment manufacturers have had to find new ways to promote and market their new products.
One of the potential trends that has come from COVID-19 is the idea of virtual tradeshows.
While virtual tradeshows may be an option for the foreseeable future, this is not the preferred path moving forward for Larocca.
Though he acknowledges that virtual trade- shows are a good forum to get their customers in a digital space, Larocca says that the intimate one-on-one discussions that they can have with customers is lost in the virtual space.
“The products that we typically have are best demonstrated in person, and the interaction with customers to walk through features is needed for some of those products,” Larocca explains. “I think you lose that ability when you do it virtually.”
In preparation for the original ISC West show in March, Nortek had a plethora of innovative products they were planning to launch. Larocca says they will now be launched at the rescheduled ISC West, which will be held Oct. 5-8.
“With the types of products and services that we offer, it’s best when they can be demonstrated to a potential customer in person where they can see the functionality,” Larocca added.
With the hopes of continuing to get Mircom in from of as many industry participants and prospective customers as possible, Falbo shares that he would be open to participating in virtual tradeshows in the future.
“If there’s a way to do that online as opposed to live in person, and it’s as effective or more so than live trade shows are, Mircom would love to explore that and participate in something like that going forward,” Falbo said.
According to van Zandt, shows like ISC West are so ubiquitous the prospect of them going virtual may not be likely.
However, van Zandt predicts that shows for point solutions or very niche markets could potentially move to more virtual scales.
“If you have a show where you maybe only have a couple of hundred people versus something like ISC which we have 20,000 that kind of capacity can be managed in a very cool way,” van Zandt said. “I don’t think you can get 20,000 individuals to participate in a virtual trade show, but for a very specific niche industry, I think you could because those people are going with a very specific goal.”
While the COVID-19 pandemic has created uncertainty for the future, security equipment manufacturers are continuing to do everything that they can to mitigate the impact on the supply chain, and other production challenges, in order to get product to market.
“The hardware is available to be installed if customers want. The industry has not shut down – it’s still there,” Larocca concludes.
“We will continue to try and be more proactive in the way that we touch and feel customers through the digital world.”
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