Redington now sole LSP for HP Saudi assembly plant

HP has confirmed that Nahil is no longer operating as a logistics service provider (LSP) for its PC assembly facility in Saudi Arabia. The change in channel strategy leaves Redington as the sole GCC LSP supplying PCs produced at the plant to HP’s channel development partners (CDPs) in the region.

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By  Stuart Wilson Published  March 21, 2006

HP has confirmed that Nahil is no longer operating as a logistics service provider (LSP) for its PC assembly facility in Saudi Arabia. The change in channel strategy leaves Redington as the sole GCC LSP supplying PCs produced at the plant to HP’s channel development partners (CDPs) in the region. Distributors holding CDP status have expressed concerns that the lack of LSP supplier choice has enabled Redington to impose stricter credit terms than they received under the previous model. Redington’s dual role as both an LSP and CDP in the market is also a cause for concern. Anil Gandhi, general manager personal systems group (PSG) at HP Middle East, explained the rationale behind the change: “It was a mutual decision with Nahil. Most of our partners are experts in distribution, and the forecasting and procuring of components, which is one of the roles of the LSP, requires a different skill set. We agreed that Nahil would focus more on the distribution and selling of products rather than the procurement of components.” While HP negotiates with CDPs regarding orders from the Saudi assembly facility, these companies must then close their orders with Redington, which takes responsibility for the delivery of the manufactured product to stocking points around the region including Jebel Ali. “The whole process centres around the forecasting and procurement of components; it is therefore a supply chain function. The issues around it that pertain to business can be largely addressed if we position it for what it is,” continued Gandhi. “Moreover, we are committed to working this issue through to ensure that there are no bottlenecks as a result of this type of supply chain. If we need to optimise anything over the next few months, we will,” he concluded. Speaking last year, Mathew Thomas, senior VP at Redington, explained that the distributor had taken steps to ensure that its dual LSP and CDP role did not give it an unfair advantage over other CDPs in the region looking to supply desktop PCs assembled at the facility to HP partners in the region. According to Thomas, the internal structure employed at Redington ensured that there was no conflict of interest and the pricing that other CDPs such as Tech Data received was the same as Redington’s own CDP operation.

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