THE SECURITY solutions industry can be a complex one at times, characterised as it is by a supply chain comprised of multiple different elements. Distribution companies operating within this sector continue to play a pivotal role in helping the security industry adapt to changing customer needs and instances of supply chain disruption. Here, Mark Field observes the complexities involved, while also highlighting available opportunities for the distribution landscape.
The security solutions industry has witnessed a considerable amount of volatility within the supply chain in recent years. From the factory through to the customer, component shortages, extended shipping lead times and cost increases have joined forces to exert a significant impact on how we all do business. While the situation is much improved from two or three years ago, the levels of stability haven’t yet returned to the pre-COVID-19 landscape.
The sector continues to confront the twin challenges of both component scarcity and operational difficulties, which themselves have combined to drive up costs. Further, we’ve been privy to other pressures on costs compounding the situation of late, among them higher fuel prices, increasing labour costs and inflation. On that last point, while businesses have remained broadly resilient to higher rates and weakened growth, the Bank of England has stated that the overall risk environment remains “challenging” for the time being, with further risks posed in terms of the outlook for inflation and growth.
Worried about the long-lasting impact of last year’s surge in inflation, the Bank of England duly raised interest rates at 14 meetings in a row between December 2021 and August this year. That led to a 15-year high interest rate of 5.25%. That figure has remained in place ever since.
Higher fuel prices, increasing labour costs and inflation have all found their way into our business of distribution. That being so, distributors need to work very closely with their suppliers in order to meet those challenges.
Here at Norbain, we’ve always maintained particularly strong relationships with our manufacturing partners. This current period of continuing volatility has necessarily meant that our team members are keenly focused on the supply chain and perhaps more so now than ever before.
Of course, customers don’t want to hear about supply chain challenges. They’ve come to expect a level of service despite disruption and have the option available to them of looking elsewhere or investigating a different solution.
Deliberately so, we’ve reorganised our business in order to strengthen our supply chain management and ensure that we have good levels of inventory to support our customers’ ongoing needs.
What, then, is appearing next on the horizon for the distributors of security solutions? What challenges do we believe to be ahead of us? There are three notable ones that distributors will need to confront if they are to succeed. These are the development of recurring revenue models (ie the move from ‘shifting boxes’ to subscription-based services), digitalisation and the ever-changing needs of the customer base and overcoming the skills shortage, which is a UK-wide issue.
First, let’s examine the shift towards recurring revenue models. This is an appreciable change and. as a distributor, we need to understand clearly what our role is in this transforming landscape. We must continue to add significant value within the supply chain for both our suppliers and our customers as we develop our ability to offer subscription-centric services rather than simply shifting boxes from A to B.
Again, our ability to understand what our suppliers are looking to achieve, while simultaneously listening to the needs of our customers, will be absolutely crucial when it comes to positioning ourselves in the right way to deliver on this objective.
Yes, there’s always going to be a need for the physical elements of security – surveillance cameras, recording systems and access readers, etc – but operational distributors must find a way in which to adapt and add value in different ways.
Supporting subscription-based services requires a very different set of processes from buying a box, storing it, selling it to a customer and invoicing them. Businesses like ourselves need to invest heavily in this area such that they can offer the flexibility expected in their product portfolios and processes.
This will involve not just potential changes to internal systems for billing customers, but also a considerable investment in the capability of sales and account management teams.
It’s also going to entail a different way of selling. We’ll need to educate our members of staff and impart the right skill sets that will be necessary to continue offering the high levels of service customers have come to expect.
Digitalisation in view
Everyone now wants to do more and more in the digital domain. We want to be able to buy online across different mediums, access our account details, follow up – or otherwise amend – an order, track its current situation and so on. Not only that, we also want to be able to transact those activities on demand, unconstrained by ‘normal’ business opening hours and when it suits us.
This desire has been led by consumer industries, but is now impacting business-to-business operations more and more. It’s a huge challenge for a lot of companies. Customers’ expectations around service levels and their ability to self-serve have increased comprehensively. Consequently, that’s the way you need to do business. We’re seeing more and more of the buying journey happening online. As such, we’ve had to understand what that journey looks like and how we can influence buying habits.
We have to add value without customers necessarily needing to physically speak with us. It’s no longer enough to provide the facility for them to buy online. Rather, we must replicate the dialogue they might otherwise have experienced by conversing with an account manager, in parallel anticipating their questions and their needs.
This is a key challenge we need to embrace in the coming years. Here at Norbain, we firmly believe that, by investing in more flexible and modern systems and engaging openly with our colleagues, we’ll put ourselves in a strong position for the future.
Directly linked to all of this is, of course, increased logistics functionality. In our personal lives, we’ve already become accustomed to any purchases being delivered when and how we want them to be. If you desire, for example, a one-hour window for delivery and you’re willing to pay for that outcome, your Amazon delivery will be scheduled accordingly. For a little less cost, you can make do with a longer timeframe.
All security system distributors must be able to tailor their logistics solutions to cater for such expectations. Similarly, we know that, just as consumers want to transact and gather information on demand, they also want to collect equipment when it suits them.
We’re witnessing an enhanced interest from customers wishing to use the delivery box-type solutions whereby it’s possible to deliver a given order to a safe and secure site. That might be the local Co-op, garage, DHL depot or even the Norbain warehouse. Customers can be safe in the knowledge that they’ve placed their order, the equipment is in a secure and easily accessible location and they can fit in the physical collection element as and when convenient, duly working around other commitments.
This is an area we’re investigating thoroughly so as to identify the changes we need to incorporate as a business. It’s vital that we continuously assess and develop our logistical capabilities. Here, we’ve been able to capitalise on our ability to recruit the right expertise. We work hard to find the right partners, all the while upholding the high expectations of those on whom we depend.
The third challenge inducing a headache – not just for Norbain or the security solutions industry, but many business sectors, among them IT – is the UK-wide issue of recruiting the right people with the right set of skills.
As much as this has been a challenge for Norbain, it’s actually helped us to better understand precisely what we need to do as an employer in order to make sure that we’re able to attract and then retain talented individuals.
What we’re learning is that, and particularly so when you look at our younger generation, they want to work for an employer with a clear and defined purpose. An employer that harbours values resonating directly with their own.
Understanding clearly what our responsibility is within the security solutions supply chain and delivering on that both quickly and efficiently is fundamental to our purpose. It’s taken for granted that, when a customer orders something from Norbain, it’s going to be in stock and will arrive at the stated location when we say it will. Individuals who completely understand the aforementioned purpose will be attractive to us and far easier to retain.
There’s also the ongoing challenge of a shortage of skilled engineers in the security solutions industry. At least in part, distributors can help their customers mitigate this truism by harbouring an expert understanding of how the solutions we sell work, along with strong wrap-around services such as account management, pre-configuration and technical support.
By clearly defining our purpose, we’ve also recognised the important role we have to play within the local community. Environmental, social and governance policies are becoming critical as a business differentiator. Not only do employees want to work somewhere that supports the local community, but it’s also becoming increasingly important for customers to see this commitment demonstrated in the real world.
On that note, Norbain has increased its work and participation with local charities. In parallel, we’re concentrating on our environmental impact through several projects, all of them spearheaded by our parent company.
The way in which we run our business points to our values, particularly so around integrity and the importance of being underpinned by really strong and robust processes and guidelines. Of course, there’s an expectation that our employees work within them. We cannot deliver on any of this without first engaging our employees. Our focus is simple – our people and our processes.
On the horizon
There’s no doubt that the security solutions industry continues to face myriad challenges, among them those posed by component scarcity, operational constraints and pressures exerted on costs. Against that backdrop, distributors must work more closely than ever with their manufacturing partners to strengthen supply chain management.
On the horizon are irrevocable changes to the way in which we conduct business. If met, they offer great opportunities for distributors. If not, then they pose a threat to survival. We must develop the systems and skills necessary to be able to offer subscription-based services. Undoubtedly, the expectations around customer interactions are changing rapidly as we continue along the path towards greater digitalisation.
Ultimately, security systems and solutions distributors must clearly understand their responsibilities within the supply chain and ensure that they continuously evolve their purpose. This will facilitate the best possible opportunity to attract and then retain the right individuals to the company.
If we can ensure that everything’s right, there’s certainly plenty of scope for those distributors operating within the sector to add tangible value to the supply chain and simplify the lives of both their suppliers and customers.
Mark Field is Managing Director of Norbain (www.norbain.com)