Crestron reveals improvement in suppy chain challenges

Crestron’s ability to source hard-to-find components is beginning to improve but supply chain difficulties will not be eased fully until spring 2023.

That’s according to published accounts of a webcast for residential dealers held by Crestron executives yesterday.

The lead time for key components used by Crestron has been the best since early 2021 during the last six weeks.

In addition, transport costs have fallen.Container shipments that cost $3,000 pre-Covid and which rose to $24,000 during the pandemic are now more than half way back down to $10,000.

Predictability of supply is also improving, with Crestron’s suppliers hitting stated lead times more often than before.

However, Creston’s difficulty in sourcing key components is unlikely to be fully eased until spring 2023, unless a recession hits demand sooner than expected.

Yesterday’s discussion of the supply chain brought together Crestron CEO Dan Feldstein, COO Dan Brady and executive vice-president of residential John Clancy. The panel was moderated by Crestron EVP of marketing Brad Hintze, and accounts have appeared in US-based residential AV titles CE Pro and Residential Tech Today.

“It pains me when we are not able to provide you with the products you need. We are not here to tell you everything is wonderful and that we solved all the world’s problems,” said Crestron CEO Feldstein, according to published reports.

Crestron manufactures products in the US and Mexico but there are three key foundries in Asia that produce silicon wafer needed for essential components of which there are many – a single DM NVX board requires 2,563 parts to be bought from 240 suppliers.

When the pandemic hit, the foundries Crestron relies on shut down for four to five months, leading to a depletion of inventory while demand spiked as the pandemic abated.

“The problem continues to be the raw components,” said Brady. “Before the pandemic, it was a 12-to 24-week lead time. Now, it is 80 weeks. It has nothing to do with the complexity of the product.”

Crestron had placed orders for raw materials it was receiving today some 18 to 24 months ago. Meanwhile, prices have shot up,with Crestron outbidding other companies to pay $60 per unit for a component that was previously available for five cents.

Dealers also rushed to put orders in before Crestron’s 10% price rise earlier this year, only for Shanghai to be hit by a Covid shutdown, impacting deliveries.

“It was the perfect storm that led to these incredibly long lead times,” Feldstein said.

To avoid misleading customers about delivery times and disrupting projects, Crestron has defaulted to the “worst case scenario” when putting out delivery dates but the delivery might come sooner.

The company has tripled its test capacity on important products, to remove bottlenecks when needed supplies arrive. Products are being redesigned and reprioritised with VC4, the virtual control platform, brought to market sooner to deal with limitations on the availability of some hardware-based control processors.

In the meantime, large component manufacturers such as Texas Instruments, are beginning to see their demand become more manageable, according to Brady.

“What I am hearing from every single component manufacturer is that they expect this to be tight until next spring,” he said.”I’ve been very clear that I believe it’s going to be the middle of next year, and that is indeed how it seems to be shaking out. There might be some improvements to that based upon the total global demand, whether that continues to decline or stabilises, but that’s what I believe we’re going to see.”

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