CDW 2015 Annual Report Download - page 8

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Table of Contents
Although we believe customers increasingly view technology purchases as solutions rather than discrete product and service categories, our net sales by major
category, based upon our internal category classifications is as follow:
Years Ended December 31,
2015
2014 (1)
2013 (1)
Dollars in
Millions
Percentage
of Total Net Sales
Dollars in
Millions
Percentage
of Total Net Sales
Dollars in
Millions
Percentage
of Total Net Sales
Notebooks/Mobile Devices
$ 2,539.4
19.6%
$ 2,354.0
19.5%
$ 1,696.5
15.8%
Netcomm Products
1,914.9
14.7
1,613.3
13.4
1,482.7
13.8
Enterprise and Data Storage (Including
Drives)
1,065.2
8.2
1,024.2
8.5
999.3
9.3
Other Hardware
4,756.4
36.6
4,551.1
37.6
4,184.1
38.8
Software (2)
2,163.6
16.7
2,064.1
17.1
1,982.4
18.4
Services
478.0
3.7
371.9
3.1
332.7
3.1
Other (3)
71.2
0.5
95.9
0.8
90.9
0.8
Total net sales
$ 12,988.7
100.0%
$ 12,074.5
100.0%
$ 10,768.6
100.0%
(1) Amounts have been reclassified for changes in individual product classifications to conform to the presentation for the year ended December 31, 2015.
(2) The decline in software as a percentage of total net sales is primarily driven by a higher proportion of revenue recorded on a net basis, including SaaS.
(3) Includes items such as delivery charges to customers and certain commission revenue.
Our Customers
We provide integrated IT solutions to over 250,000 small, medium and large business, government, education and healthcare customers throughout North America
and the United Kingdom. As a result of the acquisition of Kelway, we also have the ability to provide products and services to customers in over 80 countries.
Inventory Management
We utilize our IT systems to manage our inventory in a cost-efficient manner, resulting in a rapid-turn inventory model. We generally only stock items that have
attained a minimum sales volume.
Our distribution process is highly automated. Once a customer order is received and credit approved, orders are automatically routed to one of our distribution
centers for picking and shipping as well as configuration and imaging services. We operate two distribution centers in North America: a 450,000 square foot facility in
Vernon Hills, Illinois, and a 513,000 square foot facility in North Las Vegas, Nevada. We ship over 37 million units annually on an aggregate basis from these two
distribution centers. We believe that the location of these distribution centers allows us to efficiently ship products throughout North America and provide timely access to
our principal distributors. In addition, in the event of weather-related or other disruptions at one of our distribution centers, we are able to shift order processing and
fulfillment from one center to the other quickly and efficiently, enabling us to continue to ship products in a timely manner. We believe competitive sources of supply are
available in substantially all of the product categories we offer. We continue to improve the productivity of our distribution centers as measured by key performance
indicators such as units shipped per hour worked and bin accuracy. We also operate one distribution center in the United Kingdom, a 120,000 square foot facility in Rugby.
We ship over 2 million units annually from this distribution center to customers in the United Kingdom and in more than 80 countries around the world.
We also have drop-shipment arrangements with many of our OEMs and wholesale distributors, which permit us to offer products to our customers without having
to take physical delivery at our distribution centers. These arrangements generally represent approximately 45% to 55% of total consolidated net sales, including
approximately 15% to 20% related to electronic delivery for software licenses.
Information Technology Systems
We maintain customized IT and unified communication systems that enhance our ability to provide prompt, efficient and expert service to our customers. In
addition, these systems enable centralized management of key functions, including purchasing, inventory management, billing and collection of accounts receivable, sales
and distribution. Our systems provide us with thorough,
7