Firing up the engines

Efficiency is the order of the day for margin-strapped distributors

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By  Andrew Seymour Published  February 21, 2010

There are some seriously big investments going on behind the scenes at several large distributors in the Middle East at the moment and the area of focus is efficiency.

Distributors are spending a lot of time - and money - assessing how they can implement systems that ultimately achieve greater efficiencies internally and ensure customers receive a higher level of service.  

At least half of the largest regional distributors I've spoken to in the past month have identified improving their sales and customer-facing capabilities through greater automation as one of their top priorities this year.

The reason is straightforward: they need to find ways of reducing costs in an environment where raising prices simply isn't conceivable, as well as ensure they retain their edge in what is undoubtedly a fiercely competitive market.

The game might be all about buying for one dollar and selling for two, but when you are lucky to be generating net profits of 1% it makes perfect sense to evaluate how you can make your business more efficient.

For some distributors, such as Metra Computer, the focus lies on new ERP and warehousing systems as it bids to support its imminent move to a state-of-the-art logistics facility that it hopes will boost its services offering and increase flexibility. I suspect the likes of Redington and Almasa will have made equally significant outlays to underpin the recent development of their own logistics infrastructure too.

For others, the talk is about investing in new or enhanced CRM systems in an attempt to keep a tighter rein on customer behaviour and manage the sales side of the business more effectively.

Even the subject of e-commerce is being openly discussed, having largely been off the agenda up to now. There are myriad reasons why the concept of transacting online has failed to take off between distributors and resellers - and indeed it may never do to the extent of other markets - but that doesn't mean distributors are giving up on the idea.

Enterprise-focused outfits have made considerable progress in this regard. Westcon, for instance, has successfully deployed a range of online sales tools and mechanisms that have proved popular with VARs, while companies such as Despec, a specialist in supplies and consumables, are also exploring how they can drive business online.

Despec put off launching an online system for dealers last year, but it expects to go live with something this year that will allow customers to check product availability, receive instant price quotations and even place orders.

Whichever way you look at it, the uncertainty of the past year has forced Middle East distributors to analyse what they need to do to survive. And one of the conclusions they have drawn is that their operations have to be more proficient than ever before.

The fundamentals of distribution - stocking, financing, servicing - remain unchanged, that's for sure. But in a climate where every cost has to be justified down to the last cent, it has dawned on many distributors that they must aspire to an even higher degree of sophistication and productivity. And that can only be achieved by greater automation and better use of resources.   


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