What's the supply chain situation in IT distribution?
The backlog continues to grow. So we have not hit the peak. There‘s been pretty meaningful growth in our backlog in the last 90 days. I think that backlog represents current demand, but the world is sort of recognizing now that lead times are elongated. So I would also suggest that within that backlog, we see future order needs based on our customers anticipating lead times. In other words, if they believe that a product is four months out, they’re going to post the order up now in order to have a chance of getting it in that four-month time frame. So I think that the backlog represents current needs, and now there‘s an emerging part of that backlog which is future orders that are also part of that overall model. Our crystal ball would say that hopefully we’ll be beyond the peak by the middle of the year, and then really start to see progress being made and working it off in the back half of the year.
I think that if we were talking three to six months ago, the industry would say that we would have [the supply chain situation] meaningfully worked off by midyear. But I think that the industry is sort of signaling now that it looks like it‘s a bit of a more protracted recovery.
How do geopolitical events play into distribution now, particularly the tension between the United States and China over COVID, over politics, over supply chains. Where that's going? How is the tension between the U.S. and China impacting distribution?
What we‘ve always stated about the link in the IT supply chain is, we sit between our vendors and our customers. I believe that as the geopolitical outcomes impact vendors, so will they impact the IT supply chain. So I would say there’s nothing unique about IT distribution in that equation, but rather, if there are political ramifications to the segment, then they likely would apply to us now. There are parts of the world we do not have a business in. You mentioned in particular China. We really don‘t have a sales footprint. So therefore, we don’t have to determine what our business ownership might look like in China because we are not present there in particular. But I think the bigger overall macro thought is, being part of that IT supply chain, whatever macro effects geopolitical might have on the total category, we would be part of that, we‘d participate in that impact.
Does TD Synnex have any type of COVID mandate for its employees?
We align with the law, whatever the U.S. government law would state. So for example, right now the courts are deciding whether the government direction is constitutional or not. And so as that ebbs and flows, we absolutely align with rule of law. We‘ve been ebbing and flowing with those requirements.