Cisco VARs Waiting on Back Orders

For months Cisco Systems has promoted rebates and sales incentives for its core infrastructure products to spur resellers and integrators to sell more switches and routers. Some resellers have gone out and done that only to discover that product was unavailable.

Several solution providers have contacted Channel Insider about the Cisco inventory problem. They say Cisco is back ordering everything from switches and routers to unified communications gear to network gateways and security appliances. The only thing solution providers aren’t having a hard time sourcing is storage gear.

When we contacted Cisco, they provided the following statement:

“Cisco has partnered closely with its suppliers through the economic downturn to closely manage variable supply and demand levels. As customer and market demands increase, Cisco and our suppliers have the flexibility to respond quickly to those supply and demand changes. Cisco has had to temporarily extend the lead times on a select number of products due to anticipated lag time between demand and supply changes, as well as specific industry-wide capacity challenges in certain component types. We are quickly addressing this in partnership with our suppliers and contract manufacturers. We remain confident in their ability to replenish and re-build inventory levels to meet customer demand moving forward.”

Inventory shortages and logistics problems are not unique to Cisco. Solution providers have reported other vendors, including Hewlett-Packard and IBM, haven’t been keeping up with demand for hardware.

Most solution providers say they understand the reasoning behind the shortages. The recession forced many vendors to curtail product production because they didn’t want to get stuck with unsellable inventory. For instance, sales of Cisco core infrastructure products are off by as much as 20 percent year over year. Without clear visibility into sales demand and closure rates, Cisco and other hardware brands cut back on their OEM orders and shorted the supply chain.

The result of this supply chain management is solution providers waiting for equipment for four or more months, some report. Others are saying that the supply chain and wait times for order fulfillment are getting better.

“I get it, but it’s not any less painful,” one CEO said.