Aptec Group has been a distributor in the Middle East and Africa region for over 20 years. From its beginnings as a VAD (value added distributor) in the U.K., the company's revenues have seen a growth of US$200m from US$15m in 1985. Reseller World Middle East caught up with President and CEO, Ali Baghdadi, to discuss his formula for Aptec's future growth.

RWME: What would you say is the secret of Aptec's success?

AB: I think a major factor in our success and growth has been our flexibility -- thinking small and deploying rapidly. We've focused on developing markets for distribution because the potential is so phenomenal. Our success has come from our focus. We are also present all over the region - we believe a local presence is key. In fact, we probably have more in-country nationals than any other multinational distributor in the region. Put these elements together and you have a powerful selling machine.

RWME: What do you see as the key to your future growth?

AB: Our experience is that the channel buys if you talk its language, if the products and the price are right and if service is good. Of course, markets change and we need to adapt rapidly sometimes. We see training as key to our value-add proposition. We're now seeing training gaining in importance across the region and across the whole channel, in terms of both sales and product skills -- we see now that there's a real need to bring in management training skills and are looking to localize some material for this.

I believe we have to introduce ideas to resellers who can't find a segmentation or specialization in changing markets, to act as a catalyst. To help that process, we invite the channel to come together -- at the Aptec University, for instance.

Also, we reinvest all our money back into the company in order to improve service -- service centers, delivery services, an ERP system, investment in IT infrastructure, online trading and so on. The other success factor for us is being local -- we understand the region and we have a presence in all the key local markets.

For our future, the target areas are central Asia, Turkey, the Arabian Peninsula and the whole of Africa, mainly South Africa and French-speaking North Africa. Of course, in that mix they are still some territories closed to us at present. That said, we're dealing with some shrinking markets and we need to prepare our people for bad times as well as good. But we do have a fantastic team -- we're highly decentralized and I trust our country managers implicitly.

RWME: What kind of changes are you seeing in the market?

AB: One major change we're now seeing is to do with credit issues. When the channel was growing and needed finance, the banks couldn't cope. Now it's the same, especially with the technology sector failing elsewhere. That has led to pressure on major distributors to provide finance, but at our level we also need finance to deliver growth. The result? Finance is tighter across the whole channel -- there's less credit, more cash. I believe this will change -- in fact, with the currency devaluation, we're already seeing that in Egypt.

Inventory is important too. We've always applied a just-in-time model to distribution and we continue to optimize inventory days. We aim to hold stock for no more than 15 days, although in reality it's 18-20 days, depending on the territory. Key to this is to have most of what people want. We focus on about 20 'A' brands, in order to work optimal stock holding for each vendor.

RWME: What does the future hold for distribution?

AB: Because of the diverse nature of this region, it's very difficult to plan long-term. More important, perhaps, is the ability to adapt very fast to new laws and regulations. For example, the economic landscape is already different post Sept. 11, with different countries reacting in different ways. What will OPEC do? Will there be attempts at unified customs in the GCC? Will there be a growth in protectionism? Will Saudi Arabia open up? Will there be free trade from there to the UAE? At the heart of this, it's simple: we know what the region is trying to do, but events change plans. However, despite changing plans, we've maintained our investment. We may slow down, but we'll adapt.

RWME: Does this mean a shake-up in the industry?

AB: Yes, of course, we're seeing a shake-up. That always happens when the economy tightens and I believe that a lot of channel players with no speciality will simply disappear. We've seen more bankruptcies in 2001 and there hasn't been one country where that hasn't been true. So the message is: get niche, get big or get out! The old saying is still valid. Yet 'big' alone can also be a danger, you need to be good too.

RWME: So, is consolidation the answer?

AB: With so many organizations built round individuals and egos blocking mergers, success lies, I think, in these organizations looking more at the potential and understanding the move towards centralization. For ourselves, we're seeing lots of opportunities. On a weekly basis, I'm evaluating potential acquisitions with some vendors, talking to their channel partners about the benefits. However, we only consider such acquisitions if they're complementary to our existing products and services - in either geography or product lines.

RWME: If you had one message for the channel, what would it be?

AB: If I have a message for the channel in the region, based on my experience, it's this: they need to make an investment in services. We don't want to be the only people doing this!

» posted by abennett

Reseller World Middle East

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