5 Ways Distribution Is Helping The IT Industry Navigate The Coronavirus Pandemic

Frank Vitagliano, CEO of the Global Technology Distribution Council, says in times of trouble distribution is the ‘gear box for the industry that keeps the global supply chain flowing.’

Distribution Rises To The Challenge During A Crisis

Frank Vitagliano, CEO of the Global Technology Distribution Council, the industry trade association for IT distributors, said in his 30-plus years in the IT industry distribution has always responded in a time of calamity.

“I have worked with distributors as both a channel chief and solution provider CEO for more than 30 years and they never let me down,” he said. “They were always there for me. The supply chain proficiency, financial strength, support services and the ability to nurture lifelong partnerships were key to surviving crises like the 9/11 terrorist attack, the dot-com bubble and the 2008 financial crises.”

Vitagliano, who posted a blog titled “How Distributors Lead In A Time Of Crisis,” said far too often the core competencies of distribution like supply chain, global logistics, inventory management, channel financing, transactional support, volume operational excellence and pure pick, pack and ship prowess get overlooked.

“It’s only in bad times sometimes that you realize how important something is” he said. "In times of crisis you step back and realize how important they are. What distributors are doing day in and day out is keeping the businesses flowing. They are helping vendors and solution providers survive in a time like this. We have to make sure those core competencies are understood and not taken for granted. Distribution keeps the industry moving in normal times, but their leadership and core competencies are really critical in a time of crisis.”

Vitagliano, who was inducted into the IT Industry Hall of Fame in 2017, said distribution’s ability to come through for vendors and solution providers has created life-long partnerships that can withstand tough times. “Those types of relationships endure, and they endure over time,” he said. “That is what really matters especially during times like these.”

Top distribution executives Tech Data CEO Rich Hume, D&H Co-President Dan Schwab and Synnex President of Worldwide Distribution Michael Urban all recently spoke with CRN about how distributors have stepped up to help the industry get through the coronoavirus crisis.

Those executives told CRN that distribution has taken center stage in the battle to help the channel keep companies connected even as employees work at home.

“If we didn’t have the ability to have our logistics centers enabled, the entire distribution network, not just Tech Data, wouldn’t be meeting that need and I think it would be harder for companies to shift their work to remote,” Hume told CRN. “I think we’re playing a vital role right now.”

Schwab, for his part, told CRN that his company’s mission is nothing short of keeping the economy and country going during the crisis. “Right now, demand is outstripping supply, so we’re doing everything possible to increase the supply and then get the products to the partners to help them meet their end-user needs,” Schwab told CRN.

Urban told CRN that Synnex is pivoting to meet the needs of partners and vendors, offering “virtual trade shows, live streaming, and other technologies to keep business moving.”

Here are five ways Vitagliano sees distributors helping partners get through the coronavirus crisis.

Supply Chain Proficiency/Global Logistics

With demand for remote-worker solutions on the rise, every major vendor right now is working closely with distributors to navigate the supply chain issues to get products into the hands of partners and customers, said Vitagliano.

“Distributors have experience with all of the major vendors working on product constraints,” he said. “Distribution has worked with vendors countless times on product allocation issues. They know how to work with the vendors and negotiate to get as much supply into the system as they can.”

Supply chain proficiency and global logistics have long been distribution’s core competencies and are coming to the fore in the midst of the coronavirus pandemic. That proficiency “is making a ton of difference” to delivering a blizzard of products to solution providers enabling remote worker solutions with laptops, webcams and videoconferencing software, said Vitagliano.

“The good news is the distributors have in place a global supply chain network that is enabling them to move product very efficiently,” he said.

For his part, Hume told CRN that the industry as a whole is seeing “high” customer demand for PC ecosystem products. As a $37 billion distribution behemoth, Tech Data has the “benefit of the broadest portfolio in the market” and “excellent relationships with vendors” and is working “to optimize across all the different elements of the supply chain,” said Hume.

The supply chain proficiency of distribution has been tested by other crises like the financial meltdown in 2008 and the bursting of the dot-com bubble at the turn of the century, but the coronavirus is unique because of the health threat and the deaths of more than 25,000 people so far, said Vitagliano.

Unlike critical supply chain issues in the past, all of the major distributors have had to quickly put into place policies and work scenarios to protect the health and safety of their employees, said Vitagliano. “They have all had to put significant processes on a day-to-day basis to protect their employees,” he said.

Credit, Creative Financing

Distributors are helping partners through the near-term economic uncertainties with billions of dollars in new financing and creative programs that are helping tens of thousands of solution providers develop strategies to be successful during the crisis.

In fact, distributors have already been waiving fees and working individually with partners that are grappling with coronavirus issues, said Vitagliano.

“Distributor credit and creative financing underpins the entire IT supply chain ecosystem,” said Vitagliano. “The credit and financing distribution offers are sometimes overlooked because it is so fundamental to distribution. People expect it to be there, but if it wasn’t there it would be a major issue.”

Ingram Micro recently said that it is extending $110 million in additional credit to approximately 2,000 channel partners across North America through two new programs: KickStart Financing and Future Funds. In addition, the distributor is temporarily waiving any fees associated with the majority of its partner financing program. Ingram Micro said it is now offering exclusive terms to members of the Ingram Micro SMB Alliance and Trust X Alliance communities.

Ingram Micro’s new Future Funds program is offered with interest-only payments for six months and starting payments as low as 1.5 percent of the total purchase price. After six months, the customer is allowed to either pay off the balance or finance for an additional 12 to 60 months.

The financial strength of distribution powerhouses is critical in times like these, said Vitagliano.

“The distributors that are part of GTDC are multibillion-dollar companies,” he said. “The credit they extend to customers enables the IT ecosystem to operate. In a normal environment, it is really important. In a crisis like we are in now, it becomes paramount.”

Vitagliano said he has seen first-hand the benefit of credit in a crisis as both a vendor and solution provider. “I have seen how this works and how critical it is,” he said.

During the 2008 financial meltdown, Vitagliano said he saw distribution step up to provide additional capital and creative programs to help solution providers weather the storm. “Invariably the number one thing partners told me is they were having issues because customers were struggling,” he said. “That translated into customers asking for extended terms, discounts, reduced payment, canceling longer-term agreements and in some cases defaulting on payment.”

In the end, distributors worked in lockstep with partners to help them through the troubles, said Vitagliano. “What we saw then and what we are seeing now is distributors stepping up with extended terms,” he said. “Usually this comes in the form of working with partners one on one. Distributors know their solution providers. They understand what they do, how they do it and how they operate. As a result, they can build a unique credit offering that enables them to weather the storm and get through this.”

Remote Support And Services

Distribution has moved quickly to fill the critical need for remote support and services for solution providers and their customers in the midst of the global work-at-home onslaught, said Vitagliano.

“With the vendor community struggling to find supply and build products, distribution is filling the much-needed remote support and services void to solution providers and their customers,” said Vitagliano. “Remote support and services is a finely honed distribution competency. It is one of the capabilities that is sometimes taken for granted but has become really critical during the current crisis. If distribution did not have the ability to provide remote support and services, there would be absolute chaos in the marketplace right now.”

To this end, D&H created SMB product bundles to assist MSPs with collaboration solutions, including a remote student/teacher bundle and a telemedicine bundle. D&H is also offering on-demand business continuity/collaboration content for partners.

As the coronavirus response unfolded with the shuttering of schools, one of the top 10 school districts in the U.S. needed to buy 10,000 devices for students to work at home. D&H got the order on a Saturday and managed to fill it on Monday, said Schwab.

“Those students were not going to be able to work from home [without our quick response],” he said.

To that point, Vitagliano said distribution is helping to deliver fully configured solutions directly to end users or their homes on behalf of solution providers.

“Distributors are getting companies up and running so they can provide remote support to their customers, collaborating with all those people who are now working from home,” he said. “That is really important.”

Synnex, for its part, recently launched CollabSolv—a collaboration work anytime, anywhere services offering. That has provided critical support and services for solution providers setting up work-at-home solutions for customers.

Partnerships Matter In A Crisis

Distribution has developed trusted relationships with vendors and solution providers that are helping the IT ecosystem as it navigates the coronavirus outbreak, said Vitagliano.

“Partnerships matter in good times when people work with each other over a long period of time and develop long-standing relationships,” he said. “But they really matter in times of crisis, and we are in a crisis right now. What really matters in a crisis is that you can find people that you can depend on and trust. You need people that have a proven capability of providing support and services that help folks get through the crisis. That is what distribution does.”

Distribution’s ability to help vendors and solution providers through times of need has created long-standing partnerships that can weather the tough times, said Vitagliano. “Those types of relationships endure, and they endure over time,” he said. “That is what really matters especially in a crisis like this.”

Tech Data’s Hume said the community of solution providers, vendors and distributors has demonstrated time and again that it can quickly band together in emergencies. “The community becomes very small and tight when crisis emerges,” he said. “We turn to one another with any challenges and issues and hope to resolve them. I would encourage any part of the ecosystem to reach out.”

Throughout the history of IT, distributors have been a “rock” that the industry can depend on during troubled times, said Vitagliano. “Distribution has during every crisis been a huge part of ensuring the supply chain flows whether it is credit, product, technical support or creative ways of doing business,” he said. “Distributors have always done that, and they will continue to do that. Even though customers and vendors are sometimes frustrated in times like these, you have to be able to depend on someone. Distribution is the gear box for the industry that keeps the global supply chain flowing and technology products and services flowing.”

Distribution often doesn’t get the credit it deserves for the core competencies like supply chain proficiency, credit, and pick, pack and ship—all of which are especially critical when partners realize they have nowhere else to turn, said Vitagliano. “Those core competencies are sometimes taken for granted,” he said.

Human Ingenuity, Interdependency, Creative Problem-Solving

The creative problem-solving of distribution as the critical link in the IT supply chain between vendors and solution providers and the end-user customer is key to getting through any challenge, but especially when faced with global uncertainties, said Vitagliano.

“The creative problem-solving starts with each distributor figuring out on the fly how to operate in the environment that we find ourselves in,” he said. “Everyone in the world has experienced situations where their number one focus is the health of their employees and their families. Safety is the number one issue that distributors have had to think about first. Distributors have made sure human touch and interaction in this IT supply chain environment stays safe.”

No one expected just how swiftly coronavirus would change day-to-day life around the globe, said Vitagliano.

“The health component of this crisis and the totally global nature of this is unique,” he said. “There is no industry, no type of customer or location around the world that isn’t impacted by this. We have never had anything remotely like this. This is unprecedented. The reason human ingenuity and interdependencies prevail is that you first had to figure out how to get the basics done by making sure there is a safe environment for employees and the supply chain. Distribution has done that.”

Distributors, in fact, are working through the crisis supplying the technology, work-from-home support, products and solutions that are indispensable for day-to-day business for employees working at home, said Vitagliano.

“Distribution has figured out how to get things done in a different way with remote engagement and collaboration,” he said. “Some of the processes that have been put in place with the ability to set up remote work locations, team rooms, collaboration solutions and services will have a long-term impact on the industry.”