Redington relishes LSP role

Regional distributor Redington is revelling in its role as GCC Logistics Service Provider (LSP) for HP desktops produced at the vendor’s assembly facility in Saudi Arabia. Redington claims to be shipping between 6,000 and 7,000 units a month to HP distributors and resellers across the region.

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By  Stuart Wilson Published  June 27, 2005

Regional distributor Redington is revelling in its role as GCC Logistics Service Provider (LSP) for HP desktops produced at the vendor’s assembly facility in Saudi Arabia. Redington now claims to be shipping between 6,000 and 7,000 desktop units a month to HP distributors and resellers across the region. “We have two LSPs responsible for the product coming out of the Saudi plant,” explained Hazem Bazan, general manager personal systems group (PSG) and solution partners organisation (SPO) at HP Middle East. “They are Redington, covering the GCC with the exception of Saudi Arabia, and Nahil. 85% of the demand for HP desktops in the region is now being catered for by the factory in Saudi Arabia,” he added. Mathew Thomas, senior VP at Redington, explains the distributor’s role in the business model: “Working with HP, we are involved in planning the production output of the facility and sourcing the components that are required from HP’s suppliers. We also go out into the market and talk to HP Sales and Service Partners (SSPs) about what product will be available at what date.” “HP itself talks to its Channel Development Partners (CDPs) in the region and all of these companies then close their orders with Redington. Based on that demand, Redington takes the manufactured product from the Saudi facility, brings it to Jebel Ali and handles the fulfilment of the orders.” Redington, which is also an HP CDP, has taken careful steps to ensure that its LSP role does not give it an unfair advantage over other CDPs in the region looking to supply desktop PCs to HP SSPs. “We have divided up the teams very carefully internally with one group focused on sales to SSPs and the other taking care of CDPs. This means there is no conflict of interest and the pricing that Tech Data enjoys is the same as that received from Redington.” “Both Redington and Nahil have invested a lot to reduce product lead times in the region and improve processes such as customs,” added Bazan. “As an LSP Redington is focused on areas such as financing and product transfers. The CDPs are focused on sell-out activities to the channel such as credit and value-added services.” HP’s facility in the Kingdom has enjoyed solid success since opening, helped in no small part by the financial advantages that local assembly offers vendors. “One of the reasons it is so successful is the 5% duty exemption,” explained Thomas. “You can buy the same machine, the same catalogue number even with the same quality and the same service levels and you are getting a 5% duty advantage. In a business sector that revolves around 3% to 5% margins that is a huge plus.” Given the success of the commercial desktops being produced by HP in Saudi Arabia, the introduction of consumer-focused desktop PCs is also looking more likely — especially given HP’s involvement in the Kingdom’s PCs for homes initiatives. “For now, the PCs that we distribute from HP’s Saudi Arabia facility are focused on the commercial market,” concluded Thomas. “HP is working closely with us on plans to produce desktop PCs that are more consumer-focused. It is possible that we will be able to display consumer-focused PCs assembled by HP in Saudi Arabia at Gitex as well.”

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