With a complex global supply chain influencing the domestic ICT market, current price movements reflect those of the early recession, having risen to almost double that observed a year ago, says technology services provider, Probrand.
And with rising price changes set against tightened budgets and consumer confidence reported at an all-time low, the potential impact on technology sales and procurement of ICT by business indicate testing times ahead.
The health of the global economy is often tightly reflected by the volume of price changes on ICT products. There are numerous factors influencing ICT cost in this complex supply chain, from raw material and transport costs to exchange rates between countries in the supply chain.
Higher volatility of pricing in finished ICT products is a reflection of manufacturers consistently being challenged by their costs.
Raw materials for the complex ICT component supply chain are sourced from hot spots all over the world, including Australia, Africa, South America and China. Many components are built in Japan, Taiwan, Korea and Thailand. Final product assembly takes place at plants in China in many cases.
A consistently stable global economic environment delivers stable costs in the manufacture of technology and fewer price changes for the rest of the supply chain to manage.
Probrand's ICT buying tool www.theITindex.co.uk daily updates various facets of ICT supply chain data like price, stock and new product introductions within the UK distribution network, which consists of over 150,000 products from more than 2,500 manufacturers.
Probrand recorded 237,000 individual product trade price changes in the UK supply chain during August 2010. However, such is the current volatility that a sharp trend has risen to top 420,000 changes in August 2011. This is reported to be a similar level of changes to the start of the recession in 2007/8.
Peter Robbins, Probrand MD, said: "We are viewing unprecedented price movements in the UK ICT supply chain and trade price changes here are a direct result of testing global economic conditions that are challenging manufacturers by the minute.
"Are these price changes caused by tough times in the world economy or are the movements symptomatic of the ongoing disruption caused by the catastrophic events in Japan during March? Perhaps it is a combination of the two that is delivering such an unusual pattern in the most dynamic market place in the world.
"This increased volatility in the market is a testing time for strapped ICT buyers trying to keep abreast of price movements to consistently buy at best value.
"It is also challenging for any Public Sector supplier contracted to offer consistent cost-plus fixed margins on ICT products as prices are moving regularly in such high volumes.
"ICT cost savings are a critical factor in the Government's plan to reduce the deficit. This ICT price volatility is going to increase pressure on the Cabinet Office and its ability to deliver savings they have committed to deliver on ICT products."
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