Distribution giant calls for assembly overhaul

Tech Data boss criticises vendor 'smoke screen' and calls for manufacturing to be farmed out to distributors.

US distributor Tech Data's chief executive has called on hardwareufacturing to be farmed out to distributors. manufacturers to change their channel assembly strategies because the current approach is causing distributors to lose money.

Speaking exclusively to PC Dealer, Steve Raymund argued that because distributors cannot source system components themselves and are forced to buy them from hardware vendors such as HP, Compaq and IBM, the vendors are recouping the margin.

'The supply chain is too long,' he claimed. 'Manufacturers want the margin, but it is hurting my business. They are committed to a dysfunctional implementation of channel assembly. The whole idea was to make the process faster but it has just slowed it down.

'Vendors claim there is a quality issue, but this is just a smoke screen to get more margin,' Raymund added.

Earlier this year, vendors acknowledged the problem of channel assembly costs being passed on to partners. As a result, IBM offered to compensate partners for the extra work and investment involved (PC Dealer, 17 June).

Raymund's solution is that hardware vendors should behave more like designers, farming out manufacturing to distributors because they are better prepared.

Commenting on the consolidation of Tech Data with Computer 2000, he claimed that resellers would soon see the benefits through a more efficient service.

(See feature, page 28).