Dell Hit by Server Inventory Shortages

By Lawrence Walsh  |  Print this article Print

Dell is working to minimize inventory disruptions to partners and customers as the shortage of raw materials for making IT equipment hits its supply chain.

If you’re waiting on a back-ordered Dell server, you’re not alone. Dell confirmed to Channel Insider that it’s experiencing inventory disruptions in some server lines that are causing shipping delays and back orders to partners and customers.

Several vendors are affected by a shortage of raw materials used to make components in common IT hardware products, including switches, routers and now servers. Some analysts speculate that the supply chain disruption is amplified by vendors cutting back on their manufacturing orders through 2009 to control unsold inventory.

Dell declined to say which server lines and models were most affected by the disruption. A spokesperson tells Channel Insider that the company is working with customers and partners to minimize disruption to sales and operations.

Last week Cisco Systems confirmed that it is experiencing switch shortages at a time when orders for core networking infrastructure are picking up. Financial analysts have expressed concerns that the shortages could derail what is beginning to look like a rosy recovery for Cisco and other IT equipment vendors.

Cisco and Dell both said that the shortages are affecting the entire industry. However, some networking and hardware vendors say that they have inventory to fill their orders and supplement partners who can’t get product from their primary vendor.

One vendor Channel Insider spoke with said that many vendors experienced an end-of-year "cash flush" in 2009 as customers purged their budgets on equipment sales before they lost their funds. This flush threw off vendor inventory forecasts, and their manufacturers haven’t been able to respond fast enough to the sudden demand.

The equipment supply chain disruption is a boon for alternative distributors and VARs who have been sitting on inventory. Several VARs are posting notes in social networking forums about having inventory for VARs who can’t source through distribution or vendors. (A word of caution: Some of these alternative sources are littered with counterfeit gear.)

Lawrence Walsh Lawrence Walsh is editor of Baseline magazine, overseeing print and online editorial content and the strategic direction of the publication. He is also a regular columnist for Ziff Davis Enterprise's Channel Insider. Mr. Walsh is well versed in IT technology and issues, and he is an expert in IT security technologies and policies, managed services, business intelligence software and IT reseller channels. An award-winning journalist, Mr. Walsh has served as editor of CMP Technology's VARBusiness and GovernmentVAR magazines, and TechTarget's Information Security magazine. He has written hundreds of articles, analyses and commentaries on the development of reseller businesses, the IT marketplace and managed services, as well as information security policy, strategy and technology. Prior to his magazine career, Mr. Walsh was a newspaper editor and reporter, having held editorial positions at the Boston Globe, MetroWest Daily News, Brockton Enterprise and Community Newspaper Company.

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