How Supply Chain Constraints are Impacting the US Data Center Market

In this edition of Voices of the Industry, Dale Spencer, Director of Construction for Sabey Data Centers, explains why in-house construction companies can help data center operators manage supply chain issues.

For the past two years, as companies worldwide have adopted technology to foster a growing distributed workforce, the demand for connectivity has skyrocketed. We’ve seen increased adoption of virtual resources such as telehealth, e-learning, online banking, and more. Data center operators responded with urgency to keep up with demand but, as with the rest of the world, face pressure from an increasingly troubled supply chain.

In recent years, shortages of raw materials and containers, factory shutdowns, and shipping bottlenecks have aggravated an imbalanced data center supply/demand paradigm. Data center operators have watched helplessly as lead times for necessary hardware have ballooned from 12 months to 18 or even 24 months. Some end users responded by issuing purchase agreements with the intention of warehousing equipment for future projects. Unfortunately, this reaction complicates delivery timelines for this critical equipment.

Snarled supply chains in corollary industries, such as construction, compound the plight of data center operators. Roofing and weatherproofing material costs, for instance, have doubled in recent years due to their reliance on petroleum products. In an industry where manufacturers report that the price for something as simple as a screw has increased due to shortages and inflation, everything downstream naturally becomes more expensive.

However, data center operators with in-house construction companies can be more agile in these trying times. An internal construction team enables the company to respond more quickly to changes in the market, eliminating the time lost in procuring and contracting these services. Solely dedicated to constructing data centers, an in-house team is naturally proactive about sourcing critical infrastructure components, mitigating potential supply chain restraints early. Data center operators that possess this innate ability to deal with supply chain restraints can stay ahead of the challenging market.

Current critical infrastructure supply chain disruptions add complexity and risk to data center projects. Volume, quality, and cost are all rising concerns that impact a provider’s ability to meet growing customer demand in a fiercely competitive landscape. In addition to the long lead times, providers feel increased competition for limited space, power, labor, and construction resources. In this challenging season, the key to an agile and responsive supply chain management strategy seems to be utilizing a data center-centric construction team.

Dale Spencer is a veteran in the construction industry, having begun his career nearly 45 years ago with Sabey Corporation. Currently responsible for all Sabey Data Center construction projects, he has overseen the development of over 3.5 million square feet of mission-critical colocation space spanning the United States.