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case studies

IT Distribution

By  Steve

About the Business

  • Type of business – IT distributor
  • Market – IT channel re-sellers, business to business
  • Goal – to increase profits in my division

Understanding from Analysis:

Sales margins have tended to be very low in IT distribution. An average of around 6% with some re-seller accounts only achieving 2% to 3%.

Account managers paid on gross sales profit with a basic income plus commission.

Wide range of products with differing sales margins. For example PC’s only achieved 2% but network products were much higher, some as much as 15%.

There were different product managers for each range of products.

SAP was used throughout the business.

Excellent reporting available via spreadsheets.

Each re-seller had a certain amount of credit available, anything from £50,000 up to £500,000.

Effectively the IT distributor offered a large line of credit as well as a large range of products.

Action Plan

  • Once all the data was analysed and a thorough understanding of each re-seller plans were gleaned the solution to increase profits became obvious.
  • Because credit limits were finite, we moved re-sellers away from buying PC’s with low margins and towards Networking type products with high margins.
  • Some product managers may have suffered slightly but others did well.

Eventual Outcome

We managed to triple profits from around £60,000 per month to around £180,000 per month over a two year period.

Steve


A Tennis playing father of two. The two in question are at an age where everything they do is correct and anything I suggest is stupid!Luckily business is a tad easier... Once I start to understand the challenges and your vision, I can usually plot a way forward. Understanding and Discovery are my two watch words.

​Steve

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