What number from within your Q2 results pleased you the most?
GP [gross profit] growth. In distribution – and I provoke a little bit – it’s easy to grow sales. It’s much more difficult to grow GP in line or faster than sales. That requires the teams to focus on the right mix of products, and selling the value to our customers and our vendors.
It’s a little bit blurred because you have Hyve [TD Synnex’s subsidiary specialising in the design and deployment of hyperscale digital infrastructures]. But trust me, our GP grew faster in distribution than sales. And operating income grew faster in distribution than GP and sales.
That’s what pleased me the most – our ability to create value for the market and get rewarded for it.
When you were made CEO last year, TD Synnex highlighted your “operational excellence”. What’s the boldest or most significant thing you’ve tweaked or introduced on that front so far?
We have a metric when it comes to operational excellence which I introduced last year, which is cost to GP.
In general, the industry has been using cost to sales. The reason I like [cost to GP] is because I think that using cost to sales can destroy value.
If a business is at 3% gross margin, and its cost to sale is at 2%, that’s fine. But if you now use that benchmark [across] your business and you say to all your business units, ‘you need to be at 2% of sales’, if you have business units which are at 7-8% GP because they create more value for the customers and vendors, then potentially you’re destroying value.
That’s point number one.
Point two is that to improve your ratio, you have two actions. One is you reduce costs and the second is that you grow GP faster than your costs. My objective with the team is to grow GP faster than we grow costs. How do we make it happen? We need to work on productivity and efficiency. We are embarking on leveraging AI and AI agentic. Our ERP roll outs are behind us, which means we can focus again on enhancing the system to be more efficient and create more the customer experience.
Interview continues on the following page….
