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Synnex International

Transforming Distribution of High-Tech Products


Group 10
Anurag
Deepali
Vigneshwar
Parvez
Shubhanka
HISTORY
Started in 1975 as division of MiTAC to distribute Intel CPUs
Became independent in 1985, named Micro Electronics
Corporation
Incorporated as Synnex Technology International Corporation in
1988
In 1993, built fully automated warehouse facility and became a
full range channel management company
Became first (and only) distribution company listed on Taiwan
stock exchange in 1995
Began overseas expansion in 1997
Worldwide revenue of US $170 in 2007
INTERNATIONAL EXPANSIONS
Acquired a distribution company in Hong Kong in 1997. Used it
as a springboard to serve mainland China
Took equity stake in the 3
rd
largest distribution company in U.S.
in 1998, which also covered Canada and Mexico
In 1998 itself, it created its Australian subsidiary that also
served New Zealand
Took partial stake in Indian distributor Redington (36.3 %) in
2004
By 2006, it served 181 cities in 29 countries and had over
35,000 clients
CASE ANALYSIS
Use of innovative business practices by
Synnex
Optimal design of a channel structure to
accommodate IT & Telecom products
(unique features)
Achieving economies of scale and
economies of scope in distribution
Impact of web technology on distribution
channel
Use of web technology in expansion of
business
OPERATIONS
Products - multi-brand, multi-category & multi-
field
Channels - Sales & distribution
Logistics -Warehousing & transportation
Represented 300 brands, 7000 items in 4 categories
IC components
Information products
Communication devices
Consumer electronics
SYNNEX DISTRIBUTION STRATEGY
BROAD CLIENT BASE
Catered to small outlets which were neglected by
others
NO PUSH FOR VOLUME SALES
Discouraged large volume orders
Increased delivery frequency
NO REIMBURSEMENTS FOR UNSOLD STOCK
Inventory carrying risk transferred to retailers
DISTRIBUTION OF IT PRODUCTS
Supply side distribution:
Parts and components (eg. memory chips)
System products (eg. mother boards)
Demand side distribution:
Computer peripherals (eg. printers)
Consumer electronics (eg. cell phones)
HIGH TECH PRODUCTS
TRADITIONAL DISTRIBUTION MODEL
Manufacturer
Distributor
Retailer
Power Structure in a Traditional
Distributional Channel
Upstream Manufacturer
Maximum Power
Downstream Retailers Least
Power
High Unit
Value
Short Life
Cycle
Rapid drop
in retail
prices
Product Characteristics
OPTIMAL DESIGN
To accommodate IT & Telecom products (Unique
features)
High Tech products (High Retail Price, Speedy
Turnover, Fragile)
Synnex upgraded to Logistic Management Company
Internal trucking operation
Million deliveries every year ( 97% of total shipments)
Shipping errors (< 0.004%)
Fully Automatic logistic Centre
Core competency of Synnex
Real time Networking of Warehousing Facilities
OPTIMAL DESIGN
State of the art MIS
Enhanced accuracy of order contents (> 7000 items )
Lowered ordering cost
Linked all operational units
Delivery in 2 half days
Delivery of 3400 orders/daily
THE SYNNEX WAY
Synnex
Manufacturer
(Vendors)
Retailer
(Clients)
Synnex never misused trust unilaterally for short-term
gains
Earned trust from Vendors which advocated the Synnex
way outside Taiwan
As a result, a Unique Vendor-driven expansion into foreign
countries
MANAGEMENT INFORMATION SYSTEM
INVENTORY CONTROL
Automatic classification
(shortage, normal, overstock, slow-moving & dead items)
Demand prediction based on Life cycle
Through sales volume tracking, improvement in robotic packing efficiency
MANAGEMENT INFORMATION SYSTEM
CUSTOMER MANAGEMENT
Client tracking based on business size, transaction volume,
order frequency and number of items in each order
Helped in building long-term relationship with clients
EXPRESS DELIVERY
Small items pooled in a single box
Videotaping of packing process
Verification of order done by store owner
MANAGEMENT INFORMATION SYSTEM
TELEPHONE SALES
Easy availability of customer data to telemarketers
Customer could place order with one telemarketer but
make corrections with another
SERVICE DIFFERENTIATION
One year additional Quality Warranty over original
manufacturer warranty
Reliable after-sales services to end-users for vendors
Accurate tracking of items under repair through
Information system
Advanced Logistics system which enabled it to repair and
return a defective item in only 4 half days
Helped retail outlets to set up service stand
STRAGIES RECOMMENDED
Geographical Expansion
Venturing into unexplored regions like
Europe, Africa and South America
through:-
Acquiring a stake in existing distribution company or
setting up a new distribution Channel
Setting up a MIS system
After collection of relevant data, setting up warehouse
facilities
RECOMMENDATIONS (CONT.)
Implementation of web technology for
distribution channel of Synnex
Michael Porter (2001) has argued that e-commerce can allow
economic actors to significantly reduce their transaction costs.
A reduction in transaction costs then often encourages the use of
markets instead of internal hierarchies in order to organize
economic activities (Malone et al. 1987).
This is argued to increase efficiency not just at isolated firms,
but throughout a commodity chain.
Producer driven chains often are dominated by large
corporations who coordinate the entire network. Such chains
are readily observed in technology-intensive commodities.
A COMMODITY CHAIN
Use of Internet creates a borderless virtual business
platform on which suppliers, customers, competitors
and network partners can freely interact without going
through the pre-defined channels on the value chain,
members of the same business network or of different
networks can by-pass the traditional interaction
patterns and form virtual value chains
RECOMMENDATIONS (CONT.)
PARTIALLY DISINTERMEDIATED CHAIN
DISINTERMEDIATED COMMODITY CHAIN
RECOMMENDATIONS (CONT.)
Product Line expansion
Supply side expansion
Synnex can venture into distribution of Auto components.
The auto industry is a booming sector today and Synnex
can leverage this opportunity by supplying parts and
components to the Original Equipment Manufacturers
(OEMs)
Demand side expansion
Pharmaceutical industry holds a great promise today due to
the booming Healthcare Industry. Synnex can explore this
opportunity to expand its distribution channel in this
sector
RECOMMENDATIONS (CONT.)
Providing Logistics support to other distribution
companies
Synnex has presently lots of unused space in existing
warehouses due to extra capacity. This leads to capacity
unutilization. Synnex can provide this space to other
distribution companies and earn some extra revenues
Providing market research solution to other firms
Synnex has a lot of data due to its robust and efficient MIS
system. It can use this information for providing marketing
research solution and analysis to its clients and other firms
THANK YOU

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