The Document Scanner Supply Chain Dilemma
Shortages and delays are a problem, but the industry should meet demand
Late last year, I predicted that the global supply chain crisis would persist through 2022 and into parts of 2023. That’s because the biggest culprits—COVID-related regulations, increased shipping delays/costs, reliance on just in time (JIT) supply chains, the semiconductor shortage, and bad luck—aren’t something that you can fix quickly (or at all) unless you have a magic wand.
The supply chain crisis coincides with the great scanner boom, which are both underpinned by the pandemic. As businesses accelerated digitization efforts to enable their own hybrid work environment to stay productive while away from the office during the pandemic, scanner sales increased. According to Keypoint Intelligence’s 2021 North American Document Image Scanner Market Forecast, overall placements grew by 10%. So, the same forces that are driving the demand for scanning are also making it more difficult for scanner manufacturers to build and distribute scanners.
But just how bad is the supply chain problem in the document scanner industry? Will it impact the industry’s ability to keep up with accelerated demand for scanning? I was curious, so I went straight to the source. Here is what I found out.
The Document Scanner Semiconductor Problem
As far as supplies go, manufacturers are having trouble obtaining parts used to assemble scanners. One source noted that they were having trouble obtaining USB and network controllers, while another said that it was contact image sensors (CIS). Unsurprisingly, semiconductors and ASICs (specialized chips used for a particular use) are the most elusive. Chip costs are also on the rise, which is making life difficult for the scanner manufacturers.
The good news is the worst of the chip shortage appears to be in the rear-view mirror. Most vendors said that they had the most trouble acquiring chips in 2020 and 2021, but availability has been better in 2022. Most believe that product availability will be more predictable in 2023. In fact, the pendulum may shift from shortage to surplus as the world’s biggest chip makers pour billions into new fabs.
Still, it’s a very difficult environment to navigate right now. While some manufacturers have come up with new strategies to mitigate the supply chain crisis and/or been able to buy up large amounts of semiconductors, others are anticipating significant shortages in the coming year based on conversations with their vendors. One source noted that while they will be able to produce enough of their best sellers, it has impacted their product development capabilities. However, most of the vendors feel that the chip shortage will impact their ability to meet customer demand.
The Document Scanner Shipping Problem
Scanner vendors are also having trouble with moving their products from point A to point B. Scanner manufacturers are experiencing shipping delays between four and six weeks, and containers that would normally sit idle at the port for a day or two are now waiting up to a week before being moved to the next location. In total, it is taking twice as long to move the device from the manufacturing plant to the customer.
Shipping costs are also problematic. Scanner manufacturers told me that shipping costs are four- to five-times more expensive than before the pandemic—up to about $20,000. One manufacturer said that they were considering air shipping to mitigate delays, but that comes with even higher costs that customers might not be willing to pay.
Keypoint Intelligence Opinion
If I had to wager, it’d bet that the document scanner industry will be able to keep up with demand from their customers. And that’s not just because they said so.
Sure, the demand for scanning is increasing as more businesses accelerate their digitization efforts—just as it becomes more difficult to manufacture and distribute scanners. But the scanner manufactures have learned a lot in the last 20 months. They weathered what appears to be the worse of the storm, and they are better versed at dealing with a chaotic supply chain. They are making the necessary adjustments to procure critical components and leveraging alternative shipping methods to get scanners from the factory to the retailer. Will things cost more? Absolutely. Will there be delays? You bet. Will customers pony up the extra cash to wait an extra few weeks to get their scanner? What other choice do they have? After all, the money you will save by using a scanner to kick off business processes is still greater than the premiums that buyers will pay in the short term.
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