Tech Data wins $6bn GE outsourcing deal
Distribution US giant continues to court dealers for more contracts.
Tech Data has sealed a three-year $6 billion outsourcing deal withs. global integrator GE Capital IT Solutions (GECITS) that will give the distributor responsibility for all procurement, configuration and assembly, and logistics in the US.
As revealed by PC Dealer (31 March), Tech Data had earlier revealed that several exclusive distribution deals with global and regional resellers were pending.
According to Tech Data officials, the contract with GECITS is projected to generate approximately $2 billion in annual incremental revenue for the distributor, which reported turnover of $11.5 billion for the financial year ended 31 January.
Speaking to PC Dealer about the GECITS deal, Steve Raymund, chief executive of Tech Data, re-affirmed the distributor's commitment to pursuing outsourcing as a strategic policy, pointing out similarities with Compaq's recent decision to cut its partners in the US from 39 to four, to include Tech Data.
Raymund said: 'These events are really two sides of the same coin in the overall process of streamlining the industry supply chain. Everyone must focus on their own strengths and outsource the rest of their tasks.'
James Mohn, president and chief executive of GECITS, added in a statement: 'By forming the agreement with Tech Data, we can continue to drive the efficiency and service levels necessary to achieve customer satisfaction in the hardware component of our systems. We are also better equipped to deal with the issues inherent in a rapidly changing technology environment.'
Like Compaq's consolidation of its distribution channel, Raymund hinted that the spoils of outsourced distribution would also be limited to a selection of leading players.
'Ninety per cent of the action in this area is in North America and Europe and only Tech Data and Ingram Micro maintain a significant global capability,' he said.
Raymund confirmed Tech Data is involved in discussions with other resellers about exclusive distribution deals, but declined to comment on their status.
RAYMUND SLATES CA DEAL WITH CHS
Steve Raymund, chief executive of Tech Data, has slammed Computer Associates' (CA) recent decision to invest $50 million in rival distributor CHS Electronics.
CA claimed it was investing the money in CHS, in return for being supplied marketing, distribution and reseller rights. CHS officials denied the alliance was an attempt by CA to support the distributor, which recently announced it would lay off 10 per cent of its workforce and close a number of warehouses after restating its financial results for the year ended 31 December, 1998 (PC Dealer, 19 May).
But speaking exclusively to PC Dealer last week, Raymund condemned CA's investment, claiming it undermined the vendor's relationships with other channel partners, including Tech Data.
Raymund said: 'The alliance is a significant conflict of interest to which we take great exception. On balance, this deal will be detrimental to CA's overall business through distribution.'
He also dismissed suggestions that CA's alliance with CHS could set a precedent for the industry.
'It's a complete and inexplicable anomaly. I don't see any trend emerging,' Raymund added.