PROFILE - Lock Scott and barrel

Ingram Micro MD Sandy Scott doesn't believe in throwing the book - he rewrites it.

Ionce had an art teacher who was a master in the art of surprise.

rewrites it. You would never know from what direction he would appear and chastise anyone not busily slapping paint about. He shared this trait with Ingram Micro's managing director, Dr Alexander Scott, or Sandy as he prefers to be known - he has constantly taken the channel by surprise in the six months since his appointment.

Ingram's latest figurehead comes from outside the cosy world of the UK channel. Coming from the great beyond, he says, it is easier for him to identify and put right some of the bad practices that have become endemic in the channel.

Not that Ingram Micro is on the skids - its net income went up by almost 40 per cent in the second quarter of this year. But Scott is determined to shake up the distributor: 'We did some extensive research which showed that by and large, all the distributors are much the same - nobody knows what quality customer service is and therefore everybody buys on price.

Which, in the longer term, is no good for the market because we, the distributors and the vendors, have commoditised the market.

'Now we have vendors such as Compaq running around saying: "What the hell are we going to do apart from become solution providers?" Look at the adverts - IBM will be selling management consultancy next. And Compaq will do the same once it's finished merging with Digital - it will become a solutions company rather than a box manufacturer.'

The task facing Scott looked simple enough - the customers couldn't tell the difference between the big distributors and he needed to differentiate Ingram. His intention is to blow away the old ethos: 'All I am saying is, how do we break away from the old way of doing things? We just need to become customer-focused and the opportunities for us to break away from the pack will be huge. Our packing and shipping must be excellent, we need to have a product available and we need people answering the phones who know what they're talking about. '

Part of the strategy is getting back to basics - it's not a novel idea but it is one that Scott hopes will wrong-foot the opposition. For starters, he has been using the axe liberally - on senior management as well as the lower grades. Ingram has shed more than 100 jobs since his arrival.

'These are not clever things, we've just made some fundamental changes.

We have changed our recruitment policy - we've decided the personnel specifications we're looking for, the basic skills and competencies they must have for us to employ them.

'Potential employees are pre-screened before they come on site, then go through a group assessment where we're looking for those skills to come out.

Recruiting people to deliver what Scott calls 'world class service' is one thing, but you have to make a huge investment in training them. Scott acknowledges this will take time but it is a crucial part of his equation.

'There is no point recruiting people with the skills and then not empowering them to make decisions. To an extent, we can do some of that through technology, but we've made a huge investment in training. We have devised 27 modules of training for our salespeople and a whole host of training modules for customer service.

It's not just a single-dose solution - the nine full-time trainers have to maintain the skills levels attained in the initial tranche of training.

'Just to give the telesales operation of 230 staff top-up training, if I just gave them one hour of coaching a week, would take six full-time people. The fact is that you've got to keep going back and redoing the selling skills and redoing the product knowledge skills - we do product training every day now from the vendors to hone it.'

Scott doesn't see it as rocket science - more rethinking tradition. In the past, the farther the layers of management were from the customer, the worse the service levels became. As the perception of how to deal with resellers went awry, the farther up the organisation people went.

So the layers had to go.

Scott paints the staff losses as a necessary process undertaken carefully, although by all accounts some Ingram insiders saw it as more than a little traumatic.

'You see this extra layer in all the competition and in the vendor companies as well. In any organisation that lets itself become too big and remote, you find people with little else to do than work their internal magic to keep their jobs. Rapid growth tends to do that - you add layers automatically as you pull more people in. But the other process which is taking place, perhaps in the UK and possibly in the US - which I think are more mature markets than the rest of Europe or Asia-Pacific or Latin America - is the growing sophistication of the customer.

'I think we are moving on from a Henry Ford situation where you could make just one car and people would buy it. We are seeing a model develop where you can no longer continue to push boxes at the customer - you have to understand what the customer wants and then try to deliver it. And we have to get to a sales out model, to reduce the level of stock in the channel, improve returns to get the cost down and compete with Dell. That's what it's all about. Dell's warehouse turns 43 times a year and the distribution channel has to react. There are many costs that need to be taken out before companies can start to compete.'

But he also thinks that it's because there are lots of consumers out there and lots of users who are set to buy PCs for the first time. And there are more second and third time buyers who are no longer buying what Compaq says is the best box this month. They know what they want. It's a combination of knowledge and price and one Scott is aware could sink even the biggest distributor.

The changing customer profile begins to explain why the vendor-distributor relationship has deteriorated over the past few years. Scott blames vendors for not asking distributors difficult questions about how customers could be better served.

Scott believes Ingram has done all the basics. In anticipation of increased customer expectations, he is planning to revise the existing model by turning his attention to efficiency.

It's a novel notion, a channel business asking customers whether they are happy with the level of service, but will it really take off?

Scott says efficiency is as much about finding out what the reseller does not want as what it does want. Why carry the cost of sending everyone their kit the day after it's ordered when some are happy with a delivery once a week? 'It has become a badge of pride we don't always have to wear but it isn't always what the customers want.'

Marketing is a key element of the refinement. Scott believes much distributor advertising is a waste of money but he is convinced smarter marketing can generate more sales and help win back vendor marketing spend.

'We have spent millions developing a 400-seat call centre but I still have to generate leads for it. And there are no source codes on any of our adverts so we cannot track response. Our adverts have to improve.

Until now, our marketing departments have focused on big-company monolithic page ads.'

By better marketing, he means above and below the line. 'It means targeting and measuring response to find out what kind of creative works, what direct mail works and doesn't. It means being able to tell vendors what they have spent, the number of leads generated and the return that results.'

Ingram's e-commerce offering - a well-kept secret until now - also hinges on aggressive marketing. 'Some of our customers get a discount for trading electronically. About 10 per cent of our transactions are electronic and I want to see that figure grow. Why have salespeople answering price and availability queries when it can be done electronically? But we have to make the channel understand our Website works in realtime.'

Sandy Scott is a man confident of doing the right thing. As my art teacher also used to say: 'Speak softly and carry a big stick.' He may not be speaking softly, but you'd better watch out for that stick.