Ingram Micro Expects More Cost-Cutting Measures

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Ingram Micro expects to implement more cost-cutting measures this year to offset the slow economy and vendors' direct initiatives, said executives.

The distributor would not detail where the cuts would come from or when.

"We have more work ahead of us. We are reviewing all aspects of our business, and we can still make significant cost improvements. I can assure you we're not going to stop until we maximize our longtime profitability," said Kent Foster, chairman and CEO of the distributor.

Ingram Micro has cut about 500 jobs since the end of 2001, about 3 percent of its workforce, now at 14,000 worldwide. In addition, Ingram Micro examines each vendor and solution provider relationship for profitability. If a customer or vendor partner is not profitable with the distributor, changes must be made, said Mike Grainger, president and COO.

The balance between cutting costs and servicing customers is a delicate one, Grainger said.

"The cardinal rule when we're looking at what we want to do is the customer. We pay attention to customer service metrics, accounting controls, opinion surveys, to balance with the things we need to get done," Grainger said. "We've been fairly careful at [considering what does it mean to the customers and vendors affected, and we may modify it before we implement it. It's not just a cost exercise."

As an example, Ingram Micro went through three or four iterations of the reorganization it conducted in its sales organization last year before the final version was rolled out, Grainger said.

"Now we have less people in our sales organization, but our customer coverage statistics are several times higher," Grainger said.

Ingram Micro expects to save $70 million on an annualized basis with the changes, executives said.

"We have significant opportunities and we have major efforts to generate the next wave of operating improvements. It takes time to get there, but we expect to see a significant impact on operating expenses," Foster said.

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