Reseller supply chains being strained by BYOD and cloud

Distributor ASM claims increasing complexity of end-user projects is putting pressure on reseller supply chains

The onset of BYOD, mobility and cloud means resellers are being asked to supply a wider array of technology to end users, increasing the strain on their supply chains.

That is according to distributor ASM Technologies, which has in response doubled the number of vendors in its supplier network to more than 1,700 in the space of a year, including many in new product categories such as audiovisual, smartphones and mobility.

ASM specialises in supplying the tier 2/3 products that are required for, but are not core to, the orders fulfilled by the major resellers.

Talking to CRN, ASM director Iain Tomkinson said resellers are pursuing increasingly complex deals, requiring them to offer a much greater variety of products.

However, Tomkinson (pictured) warned that the cost of engaging with a new vendor is £300 to £1,000, leading many resellers to turn to outfits such as ASM to manage the relationship for them. This has fuelled a rise in sales at ASM, Tomlinson added, with revenue for the year to 31 March on course to reach nearly £30m, up from £22m last year.

Tomkinson said the big £50m-plus resellers typically have a "long tail" of non-strategic vendor relationships below the core products they buy from the likes of Tech Data, Ingram Micro and Northamber.

"We take ownership of that bottom half or third," he explained. "If they spend £5,000 with one vendor we will spend £50,000 with that vendor on behalf of five VARs, meaning we get a bigger level of discount and can be more proactive."

ASM's core activity is rationalisation of tier 2/3 products for the channel, something Tomkinson claimed chimes with the desire among both end users and resellers to pare down the number of suppliers they work with.

"Everyone wants fewer suppliers, but technology is getting broader and broader," he said.

"For every supplier resellers engage with, the cost is between £300 and £1,000 to agree basic commercials, get on their systems and perhaps set up a meeting. If you are a mid-sized player with £50m revenue and 1,000 suppliers, that is a significant cost.