CRN Interview: Avnet's Roy Vallee

Roy Vallee, chairman and CEO of Avnet, the Tempe, Ariz.-based $9 billion distributor, in Jaunuary was named chairman of the Global Technology Distribution Council for 2004-2005. Vallee recently spoke with Distribution Editor Scott Campbell to discuss the 12-member organization's goals for 2004 and what to expect in distribution this year.

CRN: What projects is the GTDC working on and how are they progressing?

Vallee: We are working on a couple of major issues. One is this practice of special bids and special pricing. Through the economic downturn, this has been a widespread practice. In fact, I'd say special bids have become the norm and normal bids have become special. There are significant issues around that, not the least of which is added administration that goes with the activity and causes you to question overall profitability at the end of the day. We're working on that and we're doing that in collaboration with several distributors, but also with some of the leading [vendors'] principals. A second project is looking at what is a distributor's role in the demand-generation part of the supply chain. We are trying to determine what vendors need from a distributor and what the distributors are doing.

CRN: How are the vendors reacting to the special pricing issue? It seems like it is an easier practice to start than to stop.

Vallee: We met in Chicago several months ago for a workshop. All the vendors present there unanimously agree it's a problem, and I believe they have a sincere desire to analyze, assess and develop ways to improve upon it.

CRN: What's the next step?

Vallee: We agreed to conduct a study and to bring some facts back to the table. We expect to make this a topic of conversation at the GTDC Summit [in April]. With all of the industry's decision-makers there, we should make some real tangible progress.

CRN: In relation to the second project, what are vendors asking for and how does it differ from what distributors do now?

Vallee: That's a lot more difficult to answer because not all vendors are alike. Even within a specific vendor, there's a range of product offerings such that their need for demand generation varies. We have to understand that. Not all distributors are equal.

Some distributors are more focused on operational excellence and some on low-cost core distribution services. What vendors get for their gross margin is different for those two channels. There's not a universal answer to the question.

CRN: Bring us up to speed on some of the GTDC's projects in 2003.

Vallee: First is the data collection project. We have worked together as a council to develop the legal mechanisms, the technology mechanisms and the distribution mechanisms around data collection. We now have a product that is creating some of the industry's most robust data regarding demand.

CRN: What is your outlook for the economy this year?

Vallee: It's fair to say I'm upbeat about 2004, relative to '01, '02 and '03. However, from an IT consumption perspective, I'm not expecting a blockbuster. I think we'll see moderate growth in 2004, especially in America and Europe. There's been a lot of belt-tightening and consolidation to the technology downturn, and it's all made the distribution channel more efficient than ever before. I'm upbeat about the market for IT spending in '04 and '05, but also for the role of distribution. Distribution emerges from the downturn stronger and plays a better role in '04 and beyond.