Avoiding Hardware Surcharges Amidst Increasing OEM Lead Times

IT global supply chains are currently experiencing one of the most prolonged and widespread disruptions in recent history. And, as if increasing OEM lead times weren’t causing enough trouble already, businesses are now also getting hit with hardware surcharges. Is there any end in sight for all this madness? Perhaps not in the near future, but it’s a good thing you don’t have to wait for that time to come.

OEM lead times have been on the rise, with semiconductor chip lead times in particular, stretching to 17 weeks and entering what’s already considered the “danger zone.” Although the root cause that has triggered a domino effect in the IT supply chain is, without doubt, the pandemic-induced travel and transport restrictions and delays, a number of secondary contributing factors have exacerbated the issue.

Higher freight costs, lower freight capacities, and raw material shortages, coupled with growing competition among smartphone, gaming console, consumer appliances, and even auto industries for chip supply, have forced OEM lead times into what they have become.

As OEMs grapple with skyrocketing demand and a sluggish supply chain, companies suffer the consequences. Most of these companies are already under pressure to support remote work initiatives that are supposed to provide continuity to business operations that have already been severely affected by the economic downturn. These lengthening OEM lead times aren’t doing them any favors.

Sadly, businesses are faced with yet another challenge—hardware surcharges.

The issues that have affected the IT supply chain are causing OEMs to suffer higher costs and shrinking sales volumes. Because the burdens have become too heavy to bear, some of it is being passed on to customers downstream. IT equipment resellers and distributors have been receiving notices from their OEM suppliers announcing new hardware surcharges.

Hardware surcharge rates typically vary from one product line to another and can range between 8% to 11%. Although OEMs are saying the surcharges are only temporary, it isn’t clear when they will be lifted. It would be safe to assume that the best-case scenario would be until the pandemic is gone, but even this is not really very reassuring.

IT equipment doesn’t have to be sourced through traditional OEM channel partners. Many companies are already procuring their IT equipment through the secondary market. Because secondary market distributors aren’t bound to any OEM partnership agreements, they’re free to purchase products from any leading manufacturer at the most favorable prices. Hence, they can easily meet their customers’ needs without charging additional costs.

As customers, this means you can avoid lengthy lead times and hardware surcharges. That should be a huge boost to your efforts to establish business continuity, provide the necessary support for your remote workers, or simply keep your business running as usual in spite of this supply chain crisis.

As a global leader in the secondary IT hardware market with 155+ secure stocking locations (SSLs) in over 90 countries, CentricsIT is more than capable of providing top-notch products and services to companies seeking to avoid OEM lead times and hardware surcharges. CentricsIT has been recognized by CRN and profiled by Gartner—a testament of its exemplary reputation in IT.

We’re happy to discuss how we can address all of your IT needs. Contact us today.