Kevin Murai, who got his start at Ingram Micro Canada as MIS manager, is now corporation president. The former Canadian subsidiary’s president has worked his way up the ladder and can now put his stamp on the distribution powerhouse.
Recently, Computer Dealer News caught up with Murai at
Ingram Micro Canada’s VentureTech conference in Quebec City to discuss his strategy along with other issues concerning resellers.
CDN: All of sudden special pricing has become an issue in distribution. In the past, special pricing was necessary to compete with Dell, but now VARs find this to be an administration nightmare. Should we get rid of special pricing?
Kevin Murai: Special pricing will always be a reality of the market. To restate the problem, there is a huge administrative burden put on the channel. Distribution as well as solution providers have to understand there are hundreds of different special pricing programs from vendors. How do you navigate through all that? I can probably think of a couple of vendors who have dozens of special pricing programs. How do you understand what is the best price to deploy to your customers? That full burden is put on the distributor to deal with and debit back to the manufacturer. The Global Technology Distribution Council did some research on price deviations. They found in the U.S. last year there were one-and-half million special price transaction done through the channel. Even if you scale that down to the Canadian market place that is probably between 100,000 to 200,000 special price transactions that got done. Think about all the administration that goes with that. It is a huge burden. It is a huge cost. Not to mention the cost manufacturers have to bear. The immediate opportunity is where do we streamline some of the administration? Or, are there other ways for manufacturers to deploy better pricing? IBM has special SKUs that they target for hot moving SKUs. This helps in forecasting. HP is starting to adopt this solution. This does not solve the problem, but it cuts down on it. Long term, the industry as a whole has to figure out how to streamline the overall process. It may well be we’ll never get to one process, but at a minimum we can take a leadership role and benchmark best practices and move vendor programs towards that.
CDN: What is your philosophy on becoming a value-added distributor?
K.M. Our philosophy is we add different points of value of how products and solutions get deployed in the market place such as availability, doing a good job in pick, pack and ship, getting product delivered on time.
But, beyond that we have a number of other points of value such as pre-sales tech support, helping resellers engineer a solution, helping resellers with financial tools to get that solution out in the market, and of course the solution providers have excellent points of value. They understand customer needs. They are the direct point of contact in the relationship. They are also the front person for consulting and identify the right solution. Any time you add value, you should be compensated.
The challenge we have in our industry is with the legacy way in which product and services were sold in the market place. That framework does not allow for a lot of these new services to be deployed where all players get compensated fairly. This is one of the reasons why we are deploying the Choice Advantage business model in the U.S.
CDN: Choice Advantage was a bold step. Do you think it was necessary at this time and when do you anticipate it coming to Canada?
K.M. It was absolutely necessary for a value-added distributor to have a framework to deploy services and get compensated fairly. The framework enables a value-added distributor to capture compensation on the services they provide. If you do not have a framework to deploy services and get compensated for them then those services will never exist. We made a strategic choice a couple of years ago that we are a value-added player. To continue to evolve around that path we had to deploy this framework.
I can tell you we are committed to that path. We are in a learning phase right now.
We have deployed to more than 700 customers in the U.S. and we are in a process with those customers to understand how they use that framework, what are the right choices for them, upgrades on different services such as tech support, fulfillment services, and different kinds of financial services as well. From there we will take it to other markets.
I would expect we will make a decision on how we will actually deploy (to Canada) by the end of this year in terms of time and structure.
