Ingram Micro 2011 Annual Report Download - page 12

Asia-Pacific and Latin America. Over the past ten years we have completed 20 acquisitions. While several of
these acquisitions have been focused on the geographic or market share expansion of our traditional distribution
business, the majority, particularly in recent years, have been more focused on global expansion of our specialty
product and service offerings.
Company Strengths
Two-tier distribution continues to be an integral element of the go-to-market strategy for IT suppliers. We
believe that the current technology industry generally favors large, financially-sound distributors that have broad
product portfolios, economies of scale, strong business partner relationships and wide geographic reach. Our
value is in enabling our business partners — both reseller customers and vendors — to become more efficient,
knowledgeable and profitable. Our strengths position us well to meet the needs of our reseller and vendor
partners worldwide in both difficult economic times and growth cycles, and to lead the IT distribution and
services market as it evolves.
•Strong Working Capital Management and a Solid Financial Position. We are committed to strong
working capital management. Maintaining a close relationship with resellers enables us to monitor
demand to optimize our investment in inventory, while preserving customer fill rates and service levels.
We continue to carefully manage our inventory days on hand through targeted initiatives aimed at
minimizing excess and obsolete goods while improving our purchasing processes and product flow.
Furthermore, we continue to effectively manage our accounts receivable through timely collections, credit
limit setting, customer terms and process efficiencies to minimize our working capital requirements. Our
conservative approach to capital management, as well as our diversified portfolio of capital resources, has
served us well in tighter credit markets. Our financial strength enables us to provide valuable credit to our
customers, employing a disciplined approach to account management and creditworthiness. We also
believe that we are well-positioned to support our growth initiatives in our IT distribution business and
invest in incremental profitable growth opportunities. Finally, we believe our financial position provides
us with a competitive advantage as a reliable, long-term business partner for our supplier and reseller
partners.
•Continuous Focus on Optimizing Productivity. We continue to seek ways to improve our processes
and streamline our business model, while refining our cost structure, as necessary, to respond to changes
in market demand. Past initiatives to reduce operating expenses have focused on restructuring efforts that
we believe have created a leaner and more agile cost structure upon which to execute our growth
initiatives. Late in 2011, we aligned certain back office functions within our North America and Latin
America regions to further streamline costs and increase productivity, while maintaining market-facing
roles within each region. We believe we will realize benefits from developing a more coordinated
go-to-market approach across the Americas, leveraging tools, capabilities and relationships for the benefit
of both regions. The strategic locations of our IT systems and warehouse locations support custom
shipment requirements and optimized delivery methodologies, allowing us to deliver products faster,
while reducing shipping costs. We monitor our product catalog to better ensure that it includes the
products most desired by our customers, which should improve inventory management, realize higher
margin opportunities, and develop merchandising and pricing strategies that produce enhanced business
results.
Cost optimization efforts are and will increasingly be focused on business process improvements and
organizational alignment that leverage our global presence. Continued rollout of certain functions under a
shared services model allows for operational flexibility, lower labor costs, location diversity for business
continuity and a more efficient use of our assets. For example, certain functions within finance, vendor
management and sales that support our North American operation are located in our facility in Manila.
We are expanding our global strategic sourcing initiative to improve the value we receive on products and
services purchased to run our business (e.g., temporary labor, shipping and office supplies, and third-party
research). We are currently in the process of migrating our operations from our legacy proprietary system
to SAP in a phased, country-by-country approach. We believe that this transformation will add greater
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