GTDC Panel: Distribution Taking Ever-Changing Challenges Head-On

Whether it’s new investments, supply chain constraints or the move to Everything as a Service, distributors have the resilience to shift their business to better serve their partner communities, according to a panel of distribution executives at the GTDC Forum 2021.

Distribution: Thriving In The Face Of Adversity

Distribution is going through a wide range of changes, whether it’s outside money coming in to shake up the industry—think of the merger of Tech Data and Synnex to form TD Synnex or Platinum Equity's purchase of Ingram Micro—or whether it’s events such as the COVID-19 coronavirus pandemic or supply chain constraints. The challenges in 2021 have been particularly high.

Change was a key theme for a panel of distributor executives held this week as part of the GTDC Forum 2021 conference. The panel, sponsored by the Global Technology Distribution Council, saw GTDC CEO Frank Vitagliano discuss key issues with Rich Hume, CEO of Fremont, Calif.-based TD Synnex; Paul Bay, executive vice president and president of global technology solutions at Irvine, Calif.-based Ingram Micro; and Alessandro Cattani, CEO of Vimercate, Italy-based Esprinet. On the table was the changing face of investment in distribution and how distributors changed—and are changing—in the face of the pandemic, supply chain constraints and more.

Here’s what the panel had to say about the future of distribution and what it means for the solution provider community.

Investment Activity Yielding Channel Benefits

TD Synnex‘s Hume said the amount of investment activity in the distribution industry, such as the merger of Tech Data and Synnex to form his company TD Synnex or the Exclusive Networks IPO is very healthy for this part of the IT business.

“[Investors are] more informed relative to the vital link that we play in the entire overall IT supply chain,” he said. ”They understand the value that we bring to the market. And, in addition to that, as they take a closer look at us, they find out that we‘ve run great businesses and provide a lot of value for our shareholders as well.”

From the vendor side, Hume said, other trends are emerging where continued investment is important.

For instance, he cited the fact that a lot of distributors have invested in cloud, as-a- service and other platforms, which means the old ways of vendors focusing on building markets from a specific country perspective have given way to a global focus that distributors can provide.

“We all built our businesses from the base of the country on up,” he said. ”But using cloud as an example, Infrastructure as a Service, what happens now is vendors come to engage at the global level,” he said. ”They want to set a business plan, and then have a one-time deployment, meaning they write their API into a platform and then they would expect us to distribute that capability around the globe.”

Mergers in distribution also bring increased financial capacity, Hume said.

“From my point of view, the investment requirements on distribution get greater and greater every day with these changes in technology,” he said.

Facilitating Everything as a Service

Ingram Micro‘s Bay said distribution is key to facilitating the channel’s adoption of Everything as a Service.

Everything as a Service is a huge opportunity for the channel but still involves a lot of complexity, he said.

“It‘s one of the biggest shifts away from the technology itself to really the end users and their needs, which as we know is focused on the business outcome,” he said.

Bay divided the move toward Everything as a Service into three categories.

The first is new technologies and new partners. “Automation is the No. 1 technology spend category, and I think Forrester has it at somewhere about 90 percent growth,” he said. ”So businesses are using more automation and machine learning to help automate these manual processes and modernize ultimately the way they operate.”

These changes are not dependent on selling to an IT suite, Bay said. “It‘s a collaborative effort between both the technology side and the business side to implement these solutions,” he said.

The second category is the channel‘s adoption of marketplaces, Bay said.

“[Distributors] have all invested in marketplace strategies alongside our e-commerce strategies to accommodate this Everything-as-a-Service market growth and help provide transactional solutions for partners regardless of its licensing or products or types of products,” he said. ”Transactional models, in my opinion, need to be more flexible to accommodate these business models, and all of these needs need to be alongside the traditional product sales.”

The third category is the continued focus on customer experience, Bay said.

It now takes between eight and 10 vendors to make a solution for channel partners, which creates more complexity, he said.

“And [with] all of these complexities in solutions, we have to drive a more seamless customer experience, which is going to be even more critical. ... I believe the customer experience will be a bigger long-term value driver for technology over the industry transaction because it‘s going to come down to that better experience and greater adoption of the technology by the end user,” he said.

Driving Digital Transformation

Hume said the term “digital transformation” is in no way being overused.

“I think it is the opportunity,” he said.

Digital transformation is a rare opportunity to greatly improve productivity while at the same time significantly improving the customer experience, Hume said.

“Everybody wants to become more efficient,” he said. ”And at the same time, improved customer experience has become expected. So it‘s this combination in our connections, if you will, between ourselves and vendors and between ourselves and our customers that is now mandatory. If you get it right, it’s extremely powerful. If I just take it from a distribution lens, if you get it right, you increase your relationship interaction. Much more efficient, much more productive.”

Digital transformation also improves financial outcomes, Hume said.

“Having an efficient and improved customer experience clearly has benefits to the top line, has benefits down through the cost structure of our businesses, and just delivers a superior experience. So it is the opportunity, and it is a necessity.”

Supply Chain Constraints

Esprinet‘s Cattani said the COVID-19 pandemic showed that supply chains can be disrupted.

“You don‘t know where, you don’t know when, but a major disruption will come,” he said. ”That’s the biggest lesson that I think we learned. Hence, you need to be flexible. Flexibility is the issue.”

It is important for businesses to have well-tuned IT systems and a strong management team that can react swiftly to supply chain changes, Cattani said.

The current supply chain constraint is raising what Cattani called a philosophical question.

“Everyone is stretched to match the cost of just-in-time,” he said. ”And this quest to have super-lean inventory levels and a [push for] low costs by outsourcing everything to only a few places in the world with very long supply chains is a big question mark. I‘m reading about re-shoring, and there are also geopolitical issues behind the conflict between supply chains in the Western world and China.”

Distributors have to sit with vendor partners to discuss supply chains, Cattani said.

“We need more information,” he said. ”That‘s the big lesson. We need to connect our systems even better to the [systems] of our vendor partners to get better information. And what will be the real winning point will be the capability to adapt to changes, whatever this would mean, [maybe] higher levels of inventory or whatever.”

Productivity Improvements From COVID -19

Bay said it is apparent that the work-from-anywhere movement is here to stay, and that it has a positive impact on productivity.

“What I personally learned is that work became an outcome, and not a time or a place,” he said.

The lines between work and daily life significantly blurred as a result of so many workers staying at home because of the pandemic, Bay said.

“And it changed for all of us,” he said. ”I traveled the year before COVID 260,000 miles on one airline and spent over 100 nights in hotels. But with the great collaboration tools like we have today, we‘re going to spend a couple of hours with you today to stay connected and then we’re going to go about our day.”

Bay said he recently held a couple of CEO meetings on a single day.

“And in the old world, that would have taken three or four days,” he said. ”I would have had to go travel to have a conversation, come back to the office, and now I can do that in multiple hours instead of multiple days. So collaboration and remote working mean great productivity for all of us.”

However, relationships are still super critical, Bay said.

“So I think we‘ll have to balance this work-from-home and face-to-face meetings with virtual meetings,” he said. ”I’d love to be with all of you in a location shaking hands and seeing each other again. So we’re really going to have to operate through this. And it’s really going to come down to that user experience.”

The pandemic has also shown the need to drive modernization of systems, Bay said.

“There‘s still way too many manual touches on how we collectively do business,” he said. ”As an industry, we have to drive more automation, better processes. And it all starts with [us] to help to continue to drive productivity. ... It’s expected. And ultimately, if we do it right, when we do it right, we’re going to all have a better experience.”