Ingram seeks to do still more with less

Broad-based distributor Ingram Micro has cut 12 staff as it fights to maintain profitability in the face of ever-shrinking margins.

Steve Rust, MD of Ingram Micro Australia, said 12 staff had been made redundant on Friday, 23 January, as part of an ongoing drive to purge inefficiencies from the Australian subsidiary.

Some 13 heads had been scheduled to roll but one was re-absorbed into another Ingram Micro role, he said.

Rust said Ingram faced a constant struggle to maintain business value in the face of distribution's continually-shrinking margins.

'What we're really doing is improving some of the efficiencies in our organisation, because we are constantly trying to find ways to do more than less,' he said. 'Margins have been pretty skinny.'

In its drive for a leaner, meaner distribution machine over the last few years, Ingram Micro globally had adopted the Six Sigma business process improvement methodology made famous by General Electric, he said.

A central tenet of Six Sigma is to remove hindrances to customer satisfaction and quality one by one, thus approaching a 'zero-defect' business methodology as closely as possible.

'It's a very rigorous methodology and a lot of Fortune 500 companies use it, and in the IT industry, companies such as Microsoft, HP and Toshiba,' Rust said.

Ingram in Australia had recruited Six Sigma Blackbelt-certified Graham Cockerton as GM to hone its local edge. 'We've got to have people who know how to do this,' he said.

Rust said business process improvement also required investment - it was not purely about cutting costs. Greater efficiencies were sought across the board, he said.

For example, Ingram Micro Australia had launched a new website in October that was already improving communications with its customers and partners, he said.

'Nobody's prepared to pay for inefficiencies,' Rust said. 'Our customers expect us to manage that ... The integration between our suppliers and sales and our warehousing operations is a very intimate inter-relationship.'

Ingram Micro had also taken on Chilean expert Cristian Contreras as a specialised e-commerce manager, Rust said.

Also, some $200,000 was spent in December on expanding Ingram's Melbourne distribution centre - a move that should please Victorian resellers who wanted more product for same-day delivery, he said.

'We have actually more than doubled our capacity in Melbourne and did that over Christmas,' he said.

However, January 2004 has so far reaped higher rewards for Ingram than expected.

'January has got off pretty strongly. Our business is over 20 percent up on January last year - starting with 5 January this year and it was across the board, so I'm hopeful,' Rust said.

Ingram Micro expects 2004 basically to continue the trends of 2003, with 'anything around mobility', LCD screens, convergent products, desktop replacement, notebooks and PDAs/mobile phones tipped to do well, he said.

'Traditional products around servers and desktops, particularly desktops, is going to still be a tough market as the average price declines,' Rust said.