Cisco Systems (NASDAQ: CSCO) has tapped distributor Westcon Group Inc. as the networking vendor’s first global distribution partner, signing a multi-year distribution agreement the two companies promise will increase the available inventory for partners and make it easier for them to do cross-border business.
With the agreement, rather than signing distribution deals on a regional basis, the two companies now have a single contractual vehicle to manage global, regional and local business activities.
Dave O’Callaghan, vice-president of distribution, worldwide channels at Cisco, said partners in Canada will now be able to transact business globally through Westcon and avail themselves of worldwide inventory, not just Canadian inventory. He’s predicting shorter lead times, and greater availability in more SKUs for partners.
“This is a strategic new business model for Cisco,” said O’Callaghan. “Cisco believes this will enable Westcon to better service our partners in Canada, and potentially bring us new partners in Canada.”
With Cisco’s focus on globalization, O’Callaghan said the global agreement will also help Westcon’s business in emerging markets as well as help Cisco partners build truly global businesses, leveraging Westcon’s support to more easily transact cross-border business.
“It’s really an enabler for emerging multinationals,” said O’Callaghan, adding it will also make it easier for Cisco partners in different markets to work together. “We’re building an agency program for partners with lose relationships around the world.”
Westcon president and CEO Dean Douglas said the global agreement allows the distributor to do three primary things for its Cisco resellers. The first is to create real transparency and consistency in the way it does business around the world.
“Resellers are trying to do business across borders, and they need the ability to understand terms and the relationship between reseller and distributor so they can set expectations with the end user,” said Douglas.
Secondly, Douglas said the agreement eliminates a key level of complexity for resellers around international transactions. With international business, the nuances and challenges around taxes and multiple legal jurisdictions can make things quite complex.
“I think this contract, coupled with the abilities we’ve put in place around our international order desk, allow for an easy and straightforward process for any reseller thinking about cross-border transactions,” said Douglas.
And thirdly, he said the deal creates a much broader pool of inventory for resellers to draw from, with Westcon able to quickly ship orders from the U.S. if it doesn’t have inventory in Canada, rather than having to reorder through Cisco.
Despite that ability, Douglas said he doesn’t anticipate lowering inventory levels in Canada to rely more on U.S. stock. But in the Middle East and sub-Saharan Africa, he said he could see concentrating inventory in regional hubs rather than maintaining small inventories in multiple countries.
“This agreement allows a small to mid-sized reseller as well as the largest resellers to begin thinking about cross border transactions, because it’s made much more cost effective for them to do so,” said Douglas. “It broadens the opportunity for those resellers. Nearly all our resellers could begin thinking about going global.”
“The days of distributors being tactical are over at Cisco,” said O’Callaghan. “We see our distie relationship with Westcon now as a strategic supply chain partner.”