Bullish Aptec out to create new legacy

Aptec Holdings pulled off the boldest move of the distribution sector so far this year when it purchased the components and enterprise units of Tech Data Middle East and rebranded them TDME. CEO and chairman Ali Baghdadi exclusively reveals how Aptec is handling the latest addition to its group.

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By  Administrator Published  May 21, 2007

Channel Middle East: How does the Tech Data business you have taken over fit with Aptec?

Ali Baghdadi: It is 100% complementary with our business in that it really adds two business units to our portfolio. One is the components business, which is something that we do not have. The other is what they called the Azlan business, which is the value added distribution of enterprisetype products. We have created something of an enterprise business in Aptec, but it was diluted in the midst of everything else we do. Aptec Distribution does broadline, and it does security-type products, but it doesn't have an enterprise portfolio. This is components and value added distribution and that's why other things like HP, the things that were actually discontinued by Tech Data - and I think there were three or four vendors - are vendors that we carry in our broadline portfolio anyway.

CME: Did Tech Data's decision to cancel those brands have anything to do with the takeover or was it a completely separate issue?

AB: It's nothing entirely separate, I guess. It had to make the cancellations because it was unhappy with the performance of those vendors and because we weren't going to take them.

CME: Broadline and enterprise distribution are two very different businesses. How do you intend to balance the model?

AB: Each one is almost a standalone business unit within TDME today. We have decided to go with the same name and it would make sense to have two separate companies, but for the time being I think it is sensible to give continuity to the customers and not create additional work for us and our vendors. We have made an agreement with our insurance company - the same insurance company as that of Tech Data - to insure the customers of Tech Data with our new entity for exactly the same credit lines that they had with Tech Data. And that is regardless of whether they had a credit line with Aptec Distribution or not.

CME: You have said that TDME will operate separately from Aptec. What are the advantages of that?

AB: There are many things in the back end that will not be separate and will be consolidated. Whether it is logistics, HR or IT support, there are lots of savings that will be borne by having common backend infrastructure. There are other areas like the ERP system, the computer system, that holds the customers and is very interlinked with the customers and the back office. This will continue because we don't want to cause disruption. The front end still has the same teams in the components and value added business units. But once the dust settles and everyone is used to it and the customers are again doing the business then we will start implementing branches for the business units in-country where we can host TDME, such as Turkey, Egypt and Lebanon.

CME: Is the long term plan to fold TDME into Aptec or are you developing it as a brand of its own?

AB: We will develop it as a brand - the same as ATS, the same as Aptec Distribution, the same as Brightec. Because the business is so different it will continue as that.

CME: Tech Data admits it struggled for profitability in the Middle East. Will radical changes be required to ensure the business you have acquired becomes profitable?

AB: For a start I think we have taken the profitable parts of the business and the personnel that goes with it. Obviously we didn't have a need for all the back-end staff and so forth, so from day one it should hit the road running with profitability. That doesn't mean we are not going to be working with the vendors to really improve the profitability vendor by vendor. Distribution needs a certain level of profitability in order to perform its function properly and safely.

CME:
Aptec has stated that it plans to form a strategic alliance with Tech Data Europe. What does that actually involve?

AB: It entails a few basic things, but then we'll explore what additional things we can do together. The basic things are that Tech Data would enable its European logistics centres that supply products to be available for us in case we need supplying with some hard drives or stock that we don't have access to. And effectively we represent them in this territory so if there are customers, resellers, retailers who wish to buy from Tech Data in Europe they are referred to TDME.

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