Asbis vows to fix Dell and Toshiba inventory issues

Distributor Asbis is working to resolve supply chain issues with laptop vendors Dell and Toshiba that have impacted its inventory management performance.

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By  Andrew Seymour Published  August 25, 2008

Distributor Asbis is working to resolve supply chain issues with laptop vendors Dell and Toshiba that have impacted its inventory management performance.

The company claims that both hardware vendors are facing “inefficiencies” in deliveries and inventory replenishment, which has led to a negative effect on its receivable and inventory days given the volume of business it is now doing with the pair.

Asbis traditionally plays in the components distribution field, but has branched into finished goods during the last two years. It sold US$100m worth of laptops during the first six months of 2008, compared with US$33m in the corresponding period a year before.

“Both product lines are addressing different market segments from our traditional b-to-b. The inefficiencies refer to supply chain problems that arise both from the vendors and from our ability to address this new set of customers,” said Constantinos Tziamalis, credit and investor relations director at Asbis. “However, we have experienced this increase in receivables and inventory days as we should grant more days to retailers and other customers buying laptops as opposed to components.”

Asbis says its Middle East, Africa and Russia operations have been strongest hit by the situation due to shipments arriving from Western Europe. It has also warned that it may affect future financial results.

Toshiba’s regional general manager, Santosh Varghese, disagreed with the term ‘inefficiencies’, but acknowledged that components shortfalls had led to pressure on the supply chain.

“Toshiba had shortages in Q4-07 and Q1-08 due to the force majeure situation of fires in Matsushita factories where Toshiba sources notebook batteries,” he said. “Toshiba’s policy of strict quality control did not allow us to switch to other suppliers of batteries and so due to the battery shortages our deliveries were skewed for Q1-08.”

Varghese insists the vendor has taken several courses of action, such as supporting partners with extended credit periods and providing additional marketing investment to encourage faster sell-out.

Dell also admitted it had been affected by industry-wide shortages on certain components, but stressed that it had been “very open” with its partners and customers about delivery and supply availability.

“Dell is working with our partners to ensure clear communication of product availability to ensure minimal partner and customer impact,” said John Coulston, head of marketing at Dell Middle East. “Due to the nature of the industry, supply issues are a relatively common occurrence; Dell works to overcome these issues through early warning and ongoing communication with all key stakeholders. At the same time, Dell Middle East is building additional logistics hubs and operational centres to ensure ongoing commitment to faster, more efficient delivery and shipment processes.”

Asbis says that discussions with both Dell and Toshiba to correct the “inefficiencies” are taking place, but the company was unable to confirm exactly when it expected them to be fixed.

“We are working on this issue and the situation is getting better and better,” claimed Tziamalis. “You have to remember that a company like Dell was used to the direct model so in some ways contact with distributors is something new for them and we are both learning how to make the processes the best possible.”

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