Ingram monitors US buying model

Ingram monitors US buying model

Distributor, Ingram Micro, has unveiled a new buying model for its US resellers, but it will be at least a year before its Australian subsidiary decides whether to follow suit.

Under the new Choice Advantage program, Ingram US will allow partners to choose between three levels of pricing, differentiated through level of service. The cheapest option is for basic product procurement, while the higher pricing brackets are for more involved service sales.

Australian managing director, Steve Rust, told ARN that the local subsidiary would monitor the success of the American program before deciding whether to adopt it in Australia.

“It’s essentially a way of differentiating services where the pricing is related to value. People who want a very low level of service can attain a very low level of pricing,” he said.

At the top end would be customers wanting full service such as the design of networks or storage solutions, Rust said.

The Australian operation was already engaging with a range of barebones through to higher service customers, he said.

“It’s managed here by different products,” Rust said.

“Our more complex products require higher margins. It’s built in at a product level, but not formalised like the new program in the US.”

Rust will travel to Ingram’s US headquarters in January for an update on the program. “The Australian market is such a different market, the scale is so much smaller,” Rust said.

The company wanted to monitor the success of the US program so it could take a year to decide, he said. But the program could have benefits here.

“It could do quite well,” Rust said. “A lot of resellers have been taking this approach to customers for years.”

CEO of Ingram in the US, Kent Foster, said the new program would attract a larger market share of smaller VARS, that had traditionally been less able to negotiate deals on a case by case basis.

Rust agreed that a program aimed at smaller VARS would be attractive.

The US program also aims to minimise special pricing, often used on case-by-case basis to win particular deals.

“For us it’s not clear that Choice Advantage would necessarily affect that here,” Rust said. “Locally, special pricing is so intimately involved with the vendor. It’s not clear whether it works the same way in the US.”

The revamped logistics model adopted in the US follows a period of global cost-cutting by the distributor. In Australia, it cut 13 staff in January as part of a campaign against inefficiency.

Over the past three years, the company has progressively rolled out the “six sigma” process improvement methodology to its operations around the world.

In January, Rust told ARN the methodology was championed by many Fortune 500 companies to rigorously improve processes and build better service capabilities.

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