Partners have been told to brace for ‘pandemic levels’ of shortages in 2026. Where do you see the biggest shortages being?
We’re hearing from the component manufacturers that they’ll favour the higher-margin products.
And today the higher-margin product is the high bandwidth memory unfortunately, which goes to the hyperscalers. The risk is it will impact PCs first because the PC market is so competitive. Then it’s the same story for servers. If you’re a manufacturer and you don’t get all the memory you want, you’re going to go for the mid range and high end, rather than the low end. So it could be negative from a volume standpoint, but positive for ASPs.
The pandemic served the channel pretty well. Allocation created issues but if you look at the impact on revenue and profitability I would say [the pandemic] was pretty good [for the channel].
I remember our team suffering a lot [during the pandemic] – fighting with the vendors to get the products. So I’m not discounting [the threat of shortages]. It’s going to take a lot of work, and there will be a lot of tensions, to make sure we can serve the end users well together with the partners. But [the pandemic] was a good year.
Exertis UK is rightsizing its business, with all 1,200 staff currently at risk of redundancy. It’s potentially the UK IT channel’s biggest mass redundancy event in memory. What does this say about the distribution market and what does it mean for TD Synnex?
We are all competitors, but competition is healthy. So what’s happening is very sad.
What I’m using internally, is that it’s very important where you are positioned. In our case, we decided to focus more on commercial and exited retail. Why? Because it was a very difficult market for us. We were at best break even, if not making losses. We felt we could create more value and a better margin focusing on commercial.
My message internally is, pick your battles, and make sure you get rewarded for the service you render.
And the second thing I’m saying to my teams all the time is that we have two set of customers: the partners and the vendors. You need to make sure you’re delivering the right value to both categories. I am obsessed with making sure we serve well not only the partners, but just as importantly the vendors. I personally spend a lot of time with the vendors to understand their strategy, what they expect from us and then internally making sure we deliver on what they’re expecting. It’s not a mistake that we are winning all those awards – it’s because we have this discipline internally and we continue to strengthen it.
Exertis have lost quite a few key vendors, even before the sale to private equity. It’s very difficult to catch up, because your offering gets less rich, you become less relevant for your customers. It’s a kind of vicious circle.
Interview continues on following page…
