SYNNEX INTERNATIONAL :

TRANSFORMING DISTRIBUTION OF
HIGH-TECH PRODUCTS

Marketing Management- Group 10

Asmita PGP30304
Garima PGP30311
Neha PGP30321
Prasanna PGP30330
Prathiba PGP30331

History Of SYNNEX
In 1985 separated
from MiTAC as an
independent firm,
Micro Electronics
Corp
Distributed
mainly
computer parts
and
components
Started in 1975 as
division of MiTAC 1
of 2 pioneer in PC
makers (besides
Acer)

Evans Tu as
founding
president
Grow up rapidly. In
1988 incorporated
into Synnex
Technology
International
Corporation
In
1997 began
overseas
expansion, took
equity shares in
several
distribution
company in US,
India etc
In 2007, sales
close to US$ 6
billion & became
third largest
electronic product
distributor
worldwide

Distribution of High
Tech Products

or
Vend d
pe
Grou
Computer-component
suppliers (hardware or
software) e.g. Intel and
Microsoft.
Relied heavily on local
distributors to serve the
market
Bigger group of
manufactures e.g. HP,
Epson, NEC, Canon, Kodak,
Samsung.
Sold through multi layer
channels, supplemented by
mass media
Startups with innovative
solutions e.g Research in
Motions BlackBerry

Challenge was to identify the

product that had real market
potential

Business Issues
Distribution
rights is not
secure and
could be
forfeited at
any time
without
warning
Scope of
operations
varied
from case
to case

Little
bargainin
g power
vis--vis
their
vendor

Volume
must big
enough
to justify
the
service
cost

Mass exodus
manufactures
to China lead
to intensive
market
competition
and driven
retail prices
down quickly

The SYNNEX Way

In The beginning (1985) did
not differ from other, except its
operation scale was bigger
than most rivals
Generated sales mainly from parts
and components to PC
manufactures, and sales to
institutional clients
In 1987 begin to distribute
computer peripherals to retail
outlets. Response to the exodus PC
makers to China and the booming
market for consumer electronics

The SYNNEX Way Unconventional Practices

lem
b
Pro ected
t
De

Broad client base, willing to

cater to small outlets that were
neglected by others
Problem : profit generated
from small clients was usually
not big enough to offset the
service cost
No volume sales, Synnex
refused to fill orders that too big
for a store to handle. Instead, it
increased frequency delivery
Facts we know : high volume
sales helped distributors
reduce frequency delivery &
lower the service cost
No reimbursement for unsold
stock, manufactures allowed
distributors to reimburse retailers the
loss of unsold stock caused by
pricing changes in the retail market.
Synnex decided to discard this
practice

Problem Solving
How to keep its business
profitable ?
Synnex could boost the efficiency of
serving small retailers by bundling multiple
items in one shipment.
Action 1. Positioned itself as a one-stop
distributor for small clients. Increase
number of vendors from 28 (1992) to 300
(2008). Also increasing number of items
distributed from less than 1000 to 7000.
Action 2. Tighter control over the
shipping process by established a fleet of
trucks that numbered in hundreds. Kept
shipping errors at or below 0.004 %
Action 3. Build logistics centre to handle
all aspects of inventory management, such
as unpacking, repacking, assorting,
shipping and so on.

Problem Solving Management Information System

How to linked all operational
units ?
Inventory Control. Based on current
inventory and historical sales data, IT
systems can classify products into 5
categories : shortage, normal, overstock,
slow-moving and dead items.
Customer Management. With 35,000
clients, the IT systems could track all
clients based on their business size,
transaction volume, frequency order and
the number of items in each order.
Express delivery. Synnex pooled all
multiple item in one big box to reduce
time consuming in delivery. The
warehouse videotaped the packing
process and assigned a computer number
to each box.

Problem Solving Management Information System

How to linked all operational
units ?
Telephone Sales. To reduce cost many
firms replace personal sales with
telepohone sales. But many attempts
failed because face to face business
dealings important in some area.
Synnex quickly figured out that the key to
the success of telephone sales lay in an
information system that made customer
data available to any telemarketer who
answered the phone call.

Service Differentiation

2000. Offering an
additional year of
quality asurance
on top of original
manufacturer
warranty
1997. Attached a
service label to
the products that
it distributed

With its advanced

logistics systems,
Synnex required
less than 30
minutes to repair
broken item from
retail outlet
Selected some
retail outlets as
partner stores to
push service
quality and
increased
consumer
exposure

International Expansion
141
citie
s

16
nation
s

16 ,000
outlets

How to replicated in foreign

markets ?
Step 1. Implement MIS in the foreign
subsidiary
Step 2. Build logistics centre after
business volume grew and local
knowledge in the host contry
accumulated
Merger with local distribution
company
1997. Acquired an electronic products
distributor in Hong Kong (covered
China Market), and also distribution
company in the United States (covered
Canada and Mexico)
2004. Took partial stake (36.3 %) in an
Indian distibutor called Redington that
also operated in several Arab and
African markets

Thank You