IT Supply Chain Developments and Their Impact on Buying Decisions

We are delighted to commence this montly look at the IT market from Ian Nethercott, MCIPS, Supply Chain Director at IT digital marketplace Probrand.

The commodity IT market is one of the most challenging, not least because it is one of the largest indirect spend categories. It’s a market that never stays still, with up to 30,000 product prices changing on any given day as new products are constantly released. To help you navigate this complex landscape, I’ll be highlighting some of the latest developments and major movements that will impact key IT product categories, to support your purchasing decisions.

With many buyers using January as a time to plan subsequent spend for the year, I’m kick-starting my column with a look at some of the recent trends in 2017 and how they’ll be affecting purchasing decisions in 2018.

Exchange Rate                                                                                                                  

Exchange rates play a significant role in fuelling the volatility of price in the IT supply chain; impacting everything from the cost of components going into a computer device, to cross-border logistics charges, and the prices paid by distributors and resellers. With most IT across the supply chain bought first in dollars, and then GBP, this impacts the final price.

In 2017, the dollar underwent several peaks and troughs, however the overall trend was for the pound to regain some marginal strength against the dollar. This should lead to us seeing some small price reductions filter through for IT products, although the ups and downs of the Euro may counter that.

December 2017 was relatively stable for the euro against the GBP. Falling from 0.8813 on the 1st to 0.8748 by December 8-9, the euro then began to rise, reaching 0.8878 by Dec 21 and 0.8880 by Dec 28, before ending the month at 0.8877.

Similarly, against the USD, the euro started at 1.1901 and fell to 1.1757 by Dec 8-9. Staying low for the next week, a recovery didn’t begin until December 17, where it jumped from 1.1748 to 1.1869 on December 21 and again to 1.1979, where it sat from December 29-31.

It’s important to remember that currency fluctuations do not necessarily mean prices increase straight away. For example, if a vendor is at year-end and there is still a sales target to hit, they may resist an immediate rise – even if it means taking a 4% hit that month. But if that happens, you might expect an 8% increase the following month to compensate.

If you know the seasonal trends affecting prices, you will know in advance whether prices are likely to go up or down on the back of currency fluctuations. Armed with this knowledge, savvy buyers can judge the best times to buy.

Phones and Tablets

Phones and tablets are in the ‘one to watch’ category which is high-demand, high-volume and fast-moving. With any category that experiences a high churn of product launches, it’s important to consider user needs. Is the added functionality that comes with that latest smartphone necessary, or is it better to wait 12 months when it will cost less?

In 2017, we saw global smartphone production grow 6.5% YoY to 1.46bn units. Despite this growth, analysts are already predicting that 2018 will not be as strong, with production growth expected to drop to 5%.

In the same report, TrendForce states that smartphones will be modelled around the user experience, with 18:9 all-screen models, wide-angle and dual-camera features becoming mainstream, along with facial recognition and fingerprint technology. Inspired by how we buy as consumers, our love for small and compact is shifting in favour for practical, which may mean going bigger.

Lastly, with so many new products frequently entering the market, suppliers are often forced to cut prices to shift older models, or risk being left with stacks of inventory they don’t want. For savvy buyers, there is an opportunity here to procure out-of-trend smartphones that still do a perfectly good job, at radically low prices.


Storage and compute power are arguably at the heart of business infrastructure, with cloud computing playing a role in how IT people switch capital expenditure to operational expenditure. This is an area that we, in procurement, are increasingly being challenged with understanding.

When looking at on-premise hardware (which often forms part of much bigger, higher-value projects) there are some key forces at work which affect how prices move around. Here, it is often the component parts of the final product that collectively impact prices most, and therefore the cost of what we purchase.

Despite the short-term dip in fortunes for NAND flash, IDC has forecast global SSD shipments to grow 15.1% and revenue up 14.8% through 2021. This comes on the back of improved pricing which has boosted adoption in consumer products and for use in servers and data centres.

Lastly, IDC reported a spike in Western Europe’s external storage market in Q3. All-flash array shipments were up nearly 30%, while value grew 14.2% and capacity up 26.4% to 2,523.2 petabytes. Germany drove most growth, while the UK remained flat. With production and consumption volumes up, final product prices could see a fall during early 2018.

While there are several factors which affect the price of an IT product, knowledge of these variables – and how they change from month to month – means buyers can arm themselves with the information necessary to extract the best possible deals.

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