How Dicker Data capitalised on supply chain chaos

If Dicker Data’s Mary Stojcevski has learnt anything from the past two years, it’s not to get your hopes up for a return to 2019 ‘normal’ any time soon. 

Having expected - or hoped for - a smoother supply chain and the opening of Australia and New Zealand’s borders in 2021, the distributor’s CFO is more hesitant to hedge her bets this year. 

Thankfully for Stojcevski, the learnings from the past two years have set Dicker Data up not only to hold out against ongoing supply chain chaos, but even capitalise on it. 

“[The pandemic] is still playing into the supply chain and logistics space,” she told ARN. “But what’s different this year, compared to the first year in FY20, is that we’ve taken some of those learnings and we’ve built up and bolstered our inventory holdings. 

“We’re investing so much more in working capital. Our working capital went up A$100 million; our inventory went up A$100 million. Some of it was new vendors, but a lot of it was in anticipation of how we navigate the chip shortages and having the most available inventory that our customers are going to need and want. Hence why we’ve been able to capitalise on the disruption.”

She noted that while some global distributors are capped at certain balance sheet metrics and inventory levels, Dicker Data is uninhibited by such limitations. 

However, the distributor market is still plagued by multiple issues despite easing COVID-19 restrictions and the vaccination uptake.  

These issues include chip shortages, pallet shortages and containers not being available. Stojcevski even noted that Dicker Data cannot even book enough trucks to get its goods from its new gargantuan warehouse in Kurnell, Sydney, to customers. 

“But because this has been happening for an extended period of time you learn how to navigate that,” she added.

Nevertheless, it has undoubtedly been a huge year for Dicker Data, with its yearly financial results coming in at A$2.5 billion revenue and net profit after tax of A$73 million.

This was the year that saw Dicker Data acquire Auckland-based Exeed in a landmark A$68 million deal, shaking up the distribution landscape in New Zealand.

Just last month, the distributor also acquired Security and Information Technology (SIT) distribution division of Hills in Australia, striking a A$20 million deal to on-board new employees, vendors and partners within an expanding market segment.

Stojcevski noted that the company now has a big task ahead to integrate both businesses fully into Dicker Data’s operations while cementing its position in the New Zealand market.

Dicker’s acquisition play comes at a time of major consolidation in the global and local distribution spaces. Last year saw Tech Data and Synnex Corporation merge in a US$7.2 billion deal. More locally, Rhipe acquired cyber security specialist emt Distribution for A$11 million.

On what this means for the broader distribution market, Stojcevski said: “Each of us has our value that we bring in the distribution space. 

“You’ve got global distributors who have a place because of their broad range and broad-based view of covering a lot of consumer retail transactional space.

“Then the more niche specialised distributors. I don’t think they’ll be entirely eliminated or diminished.

“There’s going to be value provided to segments that require those additional hands-on value-added services. We’ve decided to focus our specialisation on mid-market or small-to-medium-sized customers, while offering a broad base in terms of vendor spend. The way we’ve looked at our vendor portfolio is about where we’re seeing technology spend going. 

“There is probably going to be more consolidation worldwide. But then that might just create a scenario where there’s opportunity for niche players to come back in if the needs aren’t being met via these larger distribution models.” 

With the Hills acquisition, Dicker Data will now have a bigger footing in the physical security space -- specifically cameras, surveillance equipment and endpoints -- which Stojcevski hopes will lead to more convergence and cross-sell opportunities. 

However, not only is the market seeing distributor consolidation, but also vendors consolidating distribution relationships down to one or two. Dicker Data has benefitted from this, gaining solo access to Autodesk and a bigger chunk of Dell after the vendor cut out Tech Data from its Australian line-up.

On this subject, Stojcevski said Dicker Data’s business set-up can now provide the agility vendors need, after previously tapping into different resources. 

“All our staff are in-house; our cloud portal is in-house. So, changes required to programs and vendors' changing needs can be made relatively quickly,” she said. 

“That’s where we’ve been able to provide that competitive advantage and that allows the vendor to consolidate their spending in a more focused way.” 

Looking ahead to 2022, Stojcevski said she was somewhat hopeful that large-scale digital transformation projects in certain fields would make a return to the A/NZ market.

“We will hopefully see a return to more spend in the servers, storage and networking space. A lot of that’s been relatively flat. There was an increase last year, but it was off the back of a very flat 2020 -- or actually a negative,” she said.

“Bigger infrastructure projects are coming back in a way that people and businesses are starting to think about how their digital transformation of their business is going to look. So those investments are longer term focus, as opposed to short term focus, and hopefully it does open up the talent pool. If it’s a little bit easier to recruit, that would also be beneficial.”