Chip shortages and supply chain bottlenecks have repair services seeing massive growth
One surprising byproduct of the pandemic is the overall lack of new equipment from some of the largest OEM’s in the IT hardware space. A series of unfortunate events including semiconductor shortages and supply chain bottlenecks have led to a crisis never seen before in procurement and equipment sourcing.
Sources familiar with the hardware supply chain are seeing a 56-week lead time on new models of hardware coming from Silicon Valley. These devices are responsible for routing, switching, network security, and many emerging areas of technology that the largest companies rely on every day. “We are willing to pay a premium to our vendors just to have a first shot at their next wave of inventory” one source said. “Unfortunately, we aren’t the only ones saying the same thing – there is a line that far exceeds the supply, no matter how you slice it.”
An alternative to buying new is rethinking how to leverage equipment you already own. “That networking device you decommissioned 6 months ago? It has years of useful life still remaining in it’s well-engineered, out-of-warranty, aluminum shell.” said Curtis Faulkner, Vice President of Repair Services at Sagent. “These types of devices that are seeing a second life in data centers across the globe after being repaired and refurbished.”.
The Rise of Out-of-Warranty Repair Services
Hardware repair has existed as long as out-of-warranty hardware itself. Often bundled with a maintenance contract, expensive new equipment will put an IT Director’s mind at ease – knowing the manufacturer has his or her back as long as the warranty is valid. But it’s often weeks or month after those warranties expire that heartache sets in – and it happens quickly, generally and at an inopportune time. Unexpected downtime needs to be handled with a swift hand, using strategies such as “hot sparing” or leveraging third party “smart hands” contracts. But what if the equipment isn’t available? Enter repair facilities like Sagent.
Located near Dallas, Texas a sprawling 130,000 sq/ft operations and technical facility is being expanded to handle the growing needs of it’s existing customer base. Traditionally focused on supporting Telecommunications giants, Sagent has had to pivot since early 2020 to handle the massive inflow of new customers who are looking to do “more with less”, and get their existing hardware repaired. With a turnaround time of 10 days, and a repair success rate of 98%, Sagent does not need to convince its customers of their value in today’s climate.
“The pandemic caught everyone off-guard, but nobody saw the supply chain woes that would run in parallel nearly two years in”, said Gordon Smith, CEO of Sagent. “Our repair business is only one service that Sagent has been offering for nearly 20 years, but it has seen the most rapid growth of any business unit in the last 24 months. We are investing heavily in our strengths to meet demand – but even at this rate, we are simply keeping up with the market. If I could double our repair capabilities again tomorrow, I would consider it. The Circular Economy is growing faster than anyone is realizing today. In 10 years we will look back on this moment as being the precursor to a new evolution of equipment lifecycle management.”
Sagent has expanded their Coppell location to nearly double it’s size in the last 12 months – hiring and training an additional 50 repair technicians for board and component level repairs. And to meet the growing demand, in 2021 they opened their first satellite repair facility in California bringing our services closer to our customers’ networks to minimize turnaround time and reduce transportation emissions.
Along with helping customers repair the equipment they are looking to repurpose, Sagent also has taken a stance in the secondary market – offering to certified pre-owned equipment that can be deployed in place of long lead time items typically purchased directly from the manufacturer.
Certified Pre-Owned isn’t Only for Cars
Corporate supply chain executives are scrambling to identify new sources to quickly procure the hardware and devices that were always a commodity in the marketplace. This can often leave customers with untested hardware with little to no warranty. A gamble for already strained budget dollars, to say the least. Security issues with deploying hardware into your network from an unknown entity must be seriously considered.
The concept of Certified Pre-Owned has existed since the 1990’s when Mercedes Benz and Lexus saw the quality of their vehicles outlasting the ownership of their customers. Mathematically it made sense to remarket those vehicles with a warranty.
The same formula exists today in IT and procurement. The development and engineering that has gone into the very devices that are now hard to find have led to the rise of a secondary market that includes testing, repairing/refurbishing, department of defense data erasure standards and reselling with a warranty. Sagent’s available inventory of CPO gear often exceeds $12M on any given day – and comes with a same day shipping guarantee. Cutting the lead time from months, to days.
Save Green by Going Green
Cost savings and the positive environmental impact from repurposing landfill-destined hardware can be quantified much easier than in years past. Remarketing services bridge the gap between when a device has outlived your datacenter environment, to when it’s truly ready for the scrap heap. It’s becoming more common for those devices to maintain a vital role in another market.
Enhanced SaaS offerings, like Sagent Insights, help give companies unparalleled transparency into what their hardware is worth, if it’s a good time to buy or sell, and what demand exists in the global market. The ability to sell, rather than recycle, is helping generate millions of dollars that can be directly used to fund budget-strapped projects, or certified pre-owned equipment.
“Using our patent-pending Sagent Insights platform, we are helping customers generate over $40MM per year in remarketing campaigns” said Daniel Lines. “Using our available services and Sagent Insights, we helped customers divert nearly 10 million pounds of eWaste in 2021. Those numbers are just the tip of the iceberg – and we are excited to see companies adopting these strategies more and more often” .