IT & Computer Products Computer products and technology distributors have successfully transformed themselves from pick, pack and drop operators to integrated supply chain specialists. Technology distributors have successfully leveraged their order management and fulfillment expertise to offer a host of value added services for both manufacturers and resellers.However an IT distributor’s revenue mix is still dominated by margins from company owned inventory as compared to the fee based services. This translates to an operating environment characterized by narrow gross margins resulting from intense price competition and tougher vendor terms. The contribution of back end dollars to the bottom-line is also under pressure due to reduced vendor rebates and tougher price protection norms for unsold inventory.

As the industry landscape gets tougher IT distributors have to focus on the following strategic imperatives:

• Augment customer self service options to serve options to serve resellers profitably
• Develop tools to track product line profitability and effectively track coop dollars Offer value added fee based services to reduce dependence on margins from company owned inventory
• Manage Mergers & Acquisitions by aligning business processes and disparate IT systems to truly leverage organizational synergies
• Focus on better working capital management and constantly monitor Return on working capital (ROWC)
• Build business around new and higher growth customer segments (like SMBs) and service them profitably