A company at one time maligned by its clients for the difficulty they had in dealing with it, Tech Pacific is working hard to win its way back into favour.
"We got hit up fairly badly on the Merisel acquisition," is how Tech Pacific managing director David Cullen describes the aftermath of that industry-shaking move. Having come into the top job at Australia's largest IT distributor in the middle of last year, Cullen found himself at the helm of a company struggling to meet the service requirements of not only its existing customers but also many hundreds of new ones it acquired. Combined with compound growth of around 50 per cent since 1990, the difficulty of the task was obvious.
Since then Cullen and his team say they have been working hard to improve Tech Pacific's customer service standards.
Their goal is clear. "We want to be the best in the distribution business in Australia, and be a world class IT distributor," said Cullen. "We're now looking at how we can define that in terms of what our customer's expectations are, and what we think we can deliver."
In order to deliver that goal, Tech Pacific has undergone some extensive and costly surgery. Initiatives such as the creation of sub-distributors, a Web site and improved warehouse management have gone part of the way towards this, but it is the more costly changes such as a new PABX and the creation of an internal call centre that Cullen hopes will make the biggest differences.
He hopes that feedback from the market will improve once the company rolls out its planned $7 million of new systems, including a software overhaul due for completion in 1998. That year also holds the possibility of a new warehouse opening, with a smaller warehouse servicing WA also possible. "A lot of our vendors bring product in from Singapore. They go through Perth, bring it over to Sydney and we send it back again," said Cullen.
In the interim Cullen believes a number of the measures already in place have been successful, and may be extended. "We haven't done a lot in terms of sub-distribution outside New South Wales. We're looking at putting a couple of sub-distributors in place in Victoria and maybe one in the other states."
The new call centre is currently servicing NSW clients at the commercial end of the business, and may be rolled out across Australia. Cullen said that a call centre with all staff in a central location will also enable Tech Pacific to better train its operators.
"We can't do everything the same for every customer and every vendor, but we want to provide the best levels of service. My feeling is that by having this call centre set up, and by having sub-distributors, we can provide a high level of service for those customers."
Tech Pacific's Web site has already given resellers the ability to track inventory and prices, but other services are being looked at, such as order entry. "The issue that we're grappling with is how do our customers get their information into the Internet without duplication," Cullen said.
The value-add of time and place
One issue that Cullen stresses is Tech Pacific's commitment to time and place distribution. "We've got no plans whatsoever to go direct to end users. We see we've got a model, we see that that model works, and that's where we're going to concentrate."
Indeed, the company was recently awarded four of Xircom's six awards at its Asia-Pacific distributor conference in Indonesia. This included the Distributor of the Year award for the region, the same award it also recently won for distribution of Iomega's Zip drive storage products.
And the list of vendors Tech Pacific distributes for keeps on growing, following the recent appointment of US Robotics to the portfolio.
The reason for the popularity of Tech Pacific's model is simple, said Cullen. "The manufacturers are starting to have a hard look at their business. Why shouldn't they be leveraging off a model such as Tech Pacific's, where we can get product to market a lot quicker, more efficiently and more cost effectively than what they can, while letting them concentrate on demand generation and manufacturing process."
Cullen does realise that the boom Tech Pacific has gone through won't last forever unless the company keeps adapting. "We have seen our business grow significantly over a number of years, and margins have declined. We're getting greater efficiencies, but at the end of the day you've still got to keep reinvesting. Our margins over the last 12 months have had some stability, but the pressure is on."
Thus while Tech Pacific looks set to record revenue of $1 billion for the coming year, it is not expecting the 50 per cent growth levels achieved in the past.
More than just IT
Interestingly, Cullen doesn't see Tech Pacific's skills being confined exclusively to IT in the long term. He believes Tech Pacific's core skill is as a distributor, and as such doesn't rule out expansion into other areas. "Now we're not necessarily going to lock away different parts of business within Tech Pacific that don't make sense, so it might be we set up separate companies. But we definitely see our expertise in distribution."
But in the short term Cullen feels he has his hands full reaching his initial goal. "We want people to see us as the best IT distributor.
We just can't afford to be arrogant whatsoever. There's no one that represents the number of vendors that we represent, but there are a number of niche players out there that have focused on a particular area, and do very good jobs on those areas."