Axis Communications is having a kind of Jekyll and Hyde moment. The network technology manufacturer is experiencing some of its best performance since its founding four decades ago. Yet at the same time it’s contending with negative sentiment and confusion among some channel partners in the wake of global supply chain bedlam.

On Tuesday the company announced it has reached key supply chain milestones, including more than 45 percent year-over-year increase in Q1 deliveries with continued growth through May 31, and record inventory levels in its Americas distribution channel to meet robust demand from systems integrators and end customers. This follows record-breaking 2022 global revenue of $1.6 billion and 20 percent global year-over-year growth, as outlined in the Axis 2022 Sustainability Report.

In an exclusive interview with SDM, Fredrik Nilsson, vice president of the Americas for Axis Communications, explained these achievements are a result of initiatives implemented during the supply chain crisis that have helped the company emerge from the chaos stronger than ever and positioned to meet rising market demand. Nilsson also addressed the root cause of the company’s somewhat tainted brand image due to prolonged inventory shortages and its efforts to clear up misinformation in the channel.

Working to Regain Full Capacity & Trust  

The road to recovery for Axis — with more work to be done in regaining the channel’s full confidence — has been long and arduous. Ongoing supply chain constraints and unprecedented demand for Axis products over the past year — Nilsson termed this “a perfect storm” — resulted in the company failing to meet customer expectations. For example, long lead times and a dearth of some product types across the company’s portfolio — including solutions in video surveillance, access control, intercom and audio systems — forced customers to seek alternative brands.

 “First of all, we had a lot of designs in our products that were based on specific components from specific vendors that all of a sudden were very hard to get because of very high demand,” Nilsson said. “It could be anything from simple resistors and capacitors to diodes. We have very rigorous testing; we don’t just replace them on a whim. Even though the specification says something similar, we create a new design, we have them go through all the same testing from an EMS [electronic manufacturing services] perspective, from an environmental perspective, from a stress test perspective and other things.”

Rather than looking for short-term, kneejerk fixes, Axis made a strategic decision to resolve its supply chain and production issues by settling in the for long game. The company vetted and introduced second-source suppliers, expanded its use of EMS companies to boost production capacity, invested in high-demand components to increase buffer stock, among other operational practices to diversify its supply chain.

Along the way, more than 100 cameras have been redesigned without compromising testing and quality, Nilsson said, helping the company meet high demand as well as gird against vulnerability of relying on just one or two suppliers for certain components.

“That work is all done, but it took a long time because we had a long-term approach. Each redesign took months, not weeks or days because of our quality requirements. And then we have to go out to a lot of those second source suppliers and vet them, make sure from a work ethics perspective, make sure from a sustainability perspective that they are companies we want to partner with.”

Axis is touting that its production pace is currently at an all-time high. Inventory in distribution is at a record level as well, with over 35 percent more than in the company’s history. And among its most notable recovery benchmarks: More than 85 percent of Axis products are currently available at standard lead times, Nilsson said.

“You might ask, ‘Is 85 percent of product available with standard lead time good?’ It is much better than a year ago, because a year ago it was around 60 percent only,” he explained. “So, 40 percent had extended lead time. And the 85 percent that we're at today is increasing per week. We estimate within the next few months, probably in the August timeframe, we’re going to be at 90-95 percent, which is pretty normal. We are never going to say we’re going to be 100 percent available. That’s not really normal for any company.”

Confusion in the Channel Continues to Haunt Axis 

Despite Axis Communication’s strong YoY growth and ongoing supply chain transformation, Nilsson said the company still has its work cut out to erase misunderstanding within the channel where lead times and product availability are concerned.

Axis operates a two-tier distribution model, where it sells to distributors that provide products to channel partners, which, in turn, package products for the end customer.

“Say that you are a distributor, and you’re the salesperson. You are taking orders from a lot of system integrators locally. For the past 12 months it’s been difficult to get hold of Axis products and now all of a sudden it’s not anymore, but you have 10 other vendors you need to deal with,” Nilsson explained. “And you know two or three other vendors that are readily available, you will probably say, ‘I wouldn't order that Axis product. There is still a 10-week lead time, a 20-week lead time. This other product is already on the shelf. You should order those.’ So, that’s the lingering misperception. It's actually the contrary.”

Axis hopes to mitigate the confusion by emphasizing messaging that reinforces product availability. Plus, Nilsson said one of the benefits to come out of the company’s supply chain overhaul is that it now works much closer and directly with its channel partners. This includes collaboration to improve planning, forecasting and inventory management.

Related: Supply Chain Chaos Begins to Ease Off

“We want to be much, much better at working with inventories, whether it’s large projects for large end customers that need them at certain dates to space them out, instead of having distributors place a huge amount of inventory and pull the inventory,” he said. “They can place orders of smaller chunks with us that we deliver when they actually need them as well. So we've developed a lot of processes around that and built our team to manage those as well.”

Nilsson also emphasized a core company value to always be open and transparent with its channel partners.

“We never pretended that we didn’t have a challenge. We knew that we had long lead times. We knew that we disappointed some customers and integrators,” he said. “We had open dialogue with them. We told them what we could and couldn't do. And often we fulfilled what we promised them. Sometimes we couldn’t even do that because some suppliers on our part changed their deliveries, so we had to change it over and over again for them.”

Open dialogue will continue to be a focal point in clearing up any remaining misgivings and confusion among channel partners and end customers, Nilsson said. He referenced the company’s numerous Axis Experience Centers, located across the U.S. and elsewhere, where communication is encouraged.

“This is one of the best guarantees that we are standing by our customers and partners because if there is something they don’t like they can drive over and knock on the door and have a dialogue,” he said. “We can't hide behind a phone or email or anything. We have physical locations with all kinds of demo equipment and training equipment that are truly there for our partners and customers. These are not offices; they are experience centers.”

Nilsson said the company’s work in overhauling its supply chain — as well as repairing its reputation in the marketplace — is viewed as long-term, no matter the successes to date.

“We are just getting started. This is not a short-term fix. This is a long-term initiative that we have been working on over the last 12 to 18 months,” he added. “And we still have a lot of work ahead of us to continue to be even stronger in the future as well.”