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09 Jun 2009
IT distribution is consistently undervalued from a financial perspective, despite having the most streamlined business model of its peers in other sectors, claimed the Global Technology Distribution Council (GTDC).
The organisation, which counts among its members major players such as Ingram Micro, Avnet, Tech Data, Bell Micro, Arrow Electronics, Magirus and Westcoast, met in London today to discuss how the downturn has affected global distribution, and how quickly the market will pick up.
Speaking to the assembled audience of chief executives, vice presidents and senior management representatives, Tim Curran, chief executive of the GTDC, said: “Why do vendors come back to distribution? Because they cannot duplicate the cost savings that distribution offers them. They understand that by coming back to distribution, they can save money.”
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Curran added that the US distribution market seems to have "turned a corner" , but in Europe the "picture [for the future] is less clear".
“Distribution delivers strong financial performance and continues to excel at labour productivity and working capital management. It is an industry that is extremely well managed,” he said.
“IT distribution performs in a superior manner compared to other distribution models in other industries, yet it has a lower trade value compared to other sectors and companies. This is partly because it is so misunderstood.”
During the day event, a panel comprised of Roy Vallee, chief executive of Avnet, Greg Spierkel, chief executive of Ingram Micro, Andy Bryant, worldwide president of Arrow Electronics, Klaus Hellmich, chief executive of Actebis and Allesandro Cattani, chief executive of Esprinet, spoke of their experiences in 2009 and the effect the downturn is having on their businesses.
Topics covered in the panel discussion included cashflow, credit insurance, return on capital, risk and vendor attitudes and value add. All were in agreement that the downturn had hit the industry hard.
Spierkel said: “We view this downturn as a much deeper one than anything else we have faced, but we went through something fairly similar after the Y2K and internet bubble burst in 2002. It created a three-year downdraft of revenue and caused a restructure of the channel. This is a large recession and a broad-based one.”
See CRN on Monday for more news from the GTDC event.
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