SecurityWorldMarket

20/02/2022

Tackling supply issues in the security & fire safety market

Zug, Switzerland

The fire safety and security markets are highly dependent on electronics and with that they are also affected by the supply chain crisis, caused by a combination of the pandemic and the rapid global acceleration and demand for digitalisation.  Here, Euralarm looks at the impacts of the supply chain crisis, including compliance issues and the "green deal" and what may lay ahead for the security and fire industries.

Several industries had problems even before Covid-19. Producers of chips, computer parts and other components needed for the digitalisation of our society were already under great pressure. The production capacity of these goods is limited worldwide and the slightest change in demand can cause supply problems. This was already the case with smartphones, (game) computers or televisions. Chips had already entered the automotive industry on a large scale, and with the electrification of this industry, the demand for chips soared. We see a similar development in industries and parts of society where the (Industrial) Internet of Things is becoming commonplace.

Reducing dependency risks

The consequences of the corona crisis have led many governments to recognise that the high dependence on producers out of one region poses a great a risk to certain sectors. The challenge is to reduce the risks by the creation of more and better distributed production facilities. In the pursuit of lean manufacturing, production has been outsourced to Asia which means that a shutdown of factories in one country can have a global impact. According to Euralarm, the EU also recognised this even before the pandemic. Accelerated by the corona crisis, the EU is focusing its policy, among other things, on increasing domestic capacity and diversifying the number of suppliers.

For many companies that were caught off guard by global lockdowns, the speed of recovery is almost as insidious and led to another supply chain crisis during the pandemic. Increased consumer spending and thus demand for products, combined with delayed transportation by sea and air caused major shortages and record backlogs. The tightness on container capacity is expected to continue for some time. This will not help to clear shortages of electronic components, which is expected to continue for some time.

Product compliance at stake

In the fire safety and security industries, the effects not only concern the manufacturers of equipment but also companies in the field of service and maintenance of systems. Outside this there are other areas that can impact building safety. .

The chain reaction initially caused by the shutdown of factories in countries effected not only the supply chains but also the workflows within and between companies.

Paul van der Zanden, General Director of Euralarm adds: “Another relevant topic that affects our industry is the compliance of the products that the industry delivers. With electronic components not being available due to the supply chain problems, manufacturers need to reconsider replacement of parts that aren’t available. However, with the replacement of certain components, the conformity of the final product may also be at stake.” This could make it necessary to have the product retested and recertified. High (and unnecessary) costs could result from this.

Green credentials

Securing a sustainable supply of metals and minerals used for components in fire safety and security equipment is also key to meeting the energy and climate targets for 2030 and beyond. The European Green Deal aims to make the EU’s economy sustainable. However, the transition towards green technologies, like renewable energy, e-mobility and stationary energy storage relies heavily on critical raw materials, such as cobalt, neodymium, tungsten, etc. and on new products and services. Both globally and in Europe it is expected that the demand for these materials will continue to increase. This can create challenges for the Green Deal. The impact of extracting and processing these resources is high while the supply chains are often not transparent and may lack traceability. Another challenge is the recycling of the materials. For most critical raw materials, the recycling efficiencies are low while the dependency on non-EU countries is high and still increasing.

The green ambitions of the EU could therefore also lead to certain activities being brought back to the West either to reduce the dependency of non-EU countries or to avoid CO2 emission as result of transporting goods from other parts of the world to Europe. This could lead to shorter logistics chains and more sustainability in several sectors. In that sense, Euralarm suggests, that the current crisis in the high-tech supply chains contributes to a greener world and a stronger Europe.


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