Best Of Both Worlds: How Tech Data Became The Channel's One-Stop Shop

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Logicalis found itself in a pickle every time inventory got thin.

The company, No. 29 on the 2017 CRN Solution Provider 500, took a customer satisfaction hit whenever customers experienced delays procuring equipment, according to Vince DeLuca, CEO of Logicalis U.S., headquartered in New York City. This happened roughly 10 percent to 15 percent of the time, he said.

The issues have been exacerbated by recent constraints on memory and solid-state drives, DeLuca said. And going down the natural OEM supply chain to procure scarce inventory meant dealing with elongated shipping schedules, he added.

[Discover the New Tech Data]

But that all changed when Logicalis' distributor, Avnet Technology Solutions, became part of Tech Data in February. As a broadline distributor, Tech Data holds more inventory in certain areas than Avnet did, DeLuca said, meaning that Logicalis can pull from Tech Data's supply should inventory get tight.

"Having the ability to draw inventory from your distributor versus going down the normal supply chain path is a positive," he said.

Traditional value distributors such as Avnet Technology Solutions ran pretty close to an inventory-less model in the U.S., while volume distributors such as Tech Data also stock entry-level and midrange products from suppliers, said Rich Hume, Tech Data's executive vice president and chief operating officer.

As a result of the $2.6 billion acquisition, Tech Data can now service the entire product line for data center vendors, Hume said, ranging from entry-level, drop-and-ship products to high-end, highly customizable offerings historically supported by Avnet Technology Solutions.

"Now, within a given vendor line, the reseller can have one relationship and get all of their needs met," Hume told CRN. "It really is a vendor expansion opportunity."

The purchase of Avnet's Technology Solutions business brought Tech Data into Asia-Paci­fic for the first time, returned the distributor to Latin America after a two-year absence, and took the company's top-line revenue to $35 billion.

The acquisition also stands to have a far-reaching impact on the competitive landscape. Ingram Micro — the world's No. 1 IT distributor — for the first time faces a rival with broadline and specialty capabilities spanning the entire globe. The acquisition also slashed the revenue gap between Tech Data and Ingram Micro by more than 50 percent, with the two now standing $7 billion apart in annual sales compared with the $16.5 billion revenue gap prior.

Synnex, meanwhile, bolstered its position in networking, security, and unified communications and collaboration with its $830 million purchase of Westcon Americas, which closed earlier this month. The $14 billion distributor competes against Tech Data in North America, Latin America and Japan.

Solution providers increasingly want to be able to buy a broad array of technologies in a single place, meaning that distributors with more scale will be more important going forward, said Bob Dutkowsky, Tech Data's chairman and CEO.

"It's easier to do business with one player that has those deep skills than to manage multiple relationships with multiple distributors, and then the resellers are the ones that have to cobble together the capabilities," Dutkowsky told CRN.

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