Siltek Distribution Dynamics (SDD), the focused IT supply chain company in the JSE-listed Siltek group, has boosted its capacity to distribute IBM personal systems following an outsourcing agreement with First Technology (Pty) Ltd.
In terms of the agreement, SDD will incorporate First Technology`s Gauteng IBM distribution operation, including its sales and marketing teams, into its own IBM business unit which distributes IBM PCs, servers and Thinkpads. The unit will be headed by Steven Kramer, former MD of First Technology Distribution.
The outsourcing deal does not affect First Technology`s Western, Eastern and Northern Cape operations where the two companies generally address a different customer base.
According to Colin Flatau, MD of SDD, the move is in line with Siltek`s IT Supply Chain strategy to achieve incremental revenue gains without increasing operating costs, thereby boosting the group`s bottom line. The current outsourcing deal is projected to boost SDD`s recovery on fixed overheads as well as to increase gross operating profit with the increased sales channel.
"The higher volumes achieved by the enlarged SDD IBM business unit in Gauteng, coupled with its national reach, will further amortise our back office investment into critical areas such as logistics, treasury and IT infrastructure," he adds.
Arnold Sharp, CEO of First Technology, says the agreement offers a win-win situation for SDD, First Technology and their customers.
"While sales volumes of IBM personal products have been increasing, margins have been under pressure, causing us to review our distribution strategy. The outsourcing arrangement is in line with UK trends where distribution is handled on a regional basis. It will enable us to concentrate our efforts and provide a more efficient service to dealers," he concludes.
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