Westcoast has responded to the memory crunch by boosting its inventory position by a quarter and extending credit terms to cover longer lead times.
The UK’s largest homegrown distributor – now part of ALSO – says it currently has £425m of stock in its warehouses – 25% more than this time last year.
At the same time, it’s also allowing some customers to pay later than they normally would, Westcoast CEO Sunil Madhani told IT Channel Oxygen.
“Responsible distribution”
The £4bn-revenue distributor has had a “great, great start to the year”, with Q1 revenues up by “a little bit more” than the 10% growth registered by the wider UK distribution market, CRO Phil Bell said.
That may have been partly thanks to “pull forward” from resellers striving to avoid price hikes and product shortages, he acknowledged.
“Some of the pull forward Phil refers to is actually vendors’ communication down to say, ‘guys, if you want it now, it’s not just the fact you’re not going to get any later, it’s also the fact the price is going to be higher’,” Madhani said.
“We’ve supported that both from an increased stockholding perspective and – as you’d expect from a responsible distribution company – we’ve also supported some customers to pull orders forward into that first four months with extended terms. It’s all great saying ‘buy more now’, but the deployment might not be until July.”
“This isn’t a sales tactic”
Top UK channel partner leaders at a recent IT Channel Oxygen roundtable expressed concerns that AI-induced memory shortages could last until at least 2030.
Asked for his advice on how partners should navigate deepening kit shortages, Bell urged them “just to communicate with us”.
“The prices are going up. This isn’t a sales tactic – it’s what the vendors are telling us and what the market is showing us,” he said.
The shortened quote validity windows brought in by the likes of HPE and Cisco have had a knock-on impact on distribution, Bell said.
“We’ve put a lot of extra resource into just processing the channel. Because the bid validities have shortened in certain vendors, that’s created its own issues and strains,” he said.
“Whether we’re holding stock for longer, whether we’re working with people on terms, whether it’s about roll outs or, actually, ‘is the cloud better for you versus on-prem’, or ‘how can we help you with second-user tech’, this is something that can’t necessarily be platformised.”
“I saw customers suffer”
The demise of Exertis UK – along with the clout of new owner ALSO – has helped Westcoast sign 50 new vendors over the last 12 months.
Asked for his assessment of the predicament of Westcoast’s largest homegrown peer, Madhani claimed Exertis had “done itself no favours” by the way it structured its business.
“It was sad to see. I saw customers suffer; I saw vendors suffer; I saw people suffer,” he said.
“Frankly they had too many people for the business they were managing.
“All you can ever do is manage your cost base – I’ve lived that mantra for 32 years now. Hopefully that’s a positive sign on why we’ve been successful.
“I don’t think Exertis seem to have this basic discipline.”
Doug Woodburn is editor of IT Channel Oxygen
