Tech Data knows distribution is all about simplifying transactional complexity for customers and partners buying and selling technology. Armed with real-time process data that empowers all parties to take the right action at the right time, Tech Data is driving operational excellence and maintaining competitive margins, with the help of Celonis.
Technology distributor Tech Data helps vendors and resellers bring cutting-edge technologies to the market. Its wide range of technical and business support services means customers can get the most out of technology products, solutions, and services.
Tech Data merged with SYNNEX in September 2021 to become TD SYNNEX, now the largest IT distributor in the world, with $60 billion in combined revenue and 150,000+ customers.
TD SYNNEX relies on the highest levels of operational excellence to serve its customers effectively amid rapidly evolving technology markets, growing customer expectations, and tight competitive margins.
Operational excellence is a primary focus of the global business services group. They achieve it through innovation and transformation, and streamlining central processes so Tech Data’s local entities can spend more time empowering vendors and customers.
Celonis has quickly become a vital partner in ensuring the success of these initiatives.
“From the outside, distribution looks like a very simple business. You buy and you resell to your customers. In reality, our role is clearly to simplify the complexity of the IT industry,” says Patrick Zammit, President EMEA and APJ at Tech Data.
Tech Data knew they had to provide a foundation of operational excellence that would empower their partners, not just today but in the long term, by helping them take advantage of the many profound shifts impacting the IT industry right now.
“Our role is really to connect everything. So we need to be able to address the changes that are happening. The software, which used to fly through our warehouse in CD-ROMs, is now used through cloud consumption models. From one quarter to another, you see new things coming through,” says Marco Preda, Corporate Vice President of Global Business Services.
Tech Data needed a platform that would give them the flexibility required to quickly embrace new technologies and consumption models. That’s what Anna Sagarra, Vice President of Operations, Regional Innovation Business Services, set out to find.
“My colleague had seen a process mining demo, and he came into my office saying: 'Anna, I found something that I think you are going to love'", remembers Sagarra.
Tech Data works with the leading tech suppliers so contacting Celonis — the market-leader in Process Mining — for a demo was the logical next step. “I still remember muting the mic during the demo and saying, ‘No, no, no, this cannot be. How is this possible?’"
After a three-month proof of concept, Sagarra was ready to present Celonis to Tech Data’s leadership at an innovation forum. Patrick Zammit recalls: “Anna presented Celonis to the team and after one hour — including the demo — the team voted to adopt it. We saw the power of the tool, and how we could take full advantage of the insights. It was a very quick decision.”
With Celonis in place in May 2020, the Tech Data team was ready to prioritize where to make the greatest gains in operational excellence.
Procure-to-Pay, Order-to-Cash and After Sales Management were the clear frontrunners. Getting comprehensive visibility into those areas helped Tech Data identify the improvement opportunities that would have the most immediate impact on the business — enabling them to ensure customer satisfaction by reducing cycle times while also cutting down on operational costs.
“We are recording 40 million transactions inside Celonis. That’s a lot, so it’s critical to be able to visualize this for the organization, so they can see all the dimensions of all the transactions in each moment,” says Sagarra. “Now we can visualize data at the vendor and the SKU level, which is bringing a lot of value to the organization.”
Tech Data can zero in on where specific units are in a process, or how a specific vendor is performing, for instance. They are using these insights to improve the accuracy of order ETAs — helping them ensure customers get their orders on time, and to compare vendor performance against declared ETAs. This means better-informed procurement decisions in the future.
“Another challenge Celonis supports us with is understanding stock availability for our customers,” explains Iulia Cioclea, Data Analyst. “Right now we have an analysis that gives us an overview of our aged stock that is reserved using a wide range of delivery blocks.”
Using Celonis, the team discovered 10% of stock was aging in place due to ‘improper holds’ — with tens to hundreds of millions of dollars’ worth of inventory on hold for customers. This less-than-ideal inventory situation was having an impact on working capital, as well as disrupting Procurement and Order Management processes.
Combining intelligence with automated action, Tech Data is able to address these issues and deliver on their commitment to commercial excellence through operational excellence. “We want to take this analysis one step further by setting up an action flow that will send us notifications when we reserve stock for more than a certain number of days,” says Cioclea.
In another analysis, Tech Data discovered that among the millions of transactions it processes per year, around 30% of the purchase orders were subject to price changes or cancellation. This caused delays and required additional labor hours for PO reworking. Using Celonis, the team was able to identify the problem and reduce their price change ratio by 27% in six months. In the longer term, this contributed to an overall 57% reduction in P2P cycle time in just a year.
Tech Data continues to uncover additional opportunities with Celonis. “I'm particularly excited about one of our recent analyses that is helping us to detect the amounts that we over-credit to our customers. The potential of this analysis is huge as initial estimations show that we could potentially recover between €300,000 and €500,000 per year,” says Cioclea.
Looking ahead, Tech Data has further applications of process mining and the EMS in mind. “One of the most valuable aspects of Celonis that we want to explore in the near future is related to its capability of predicting future outcomes based on current and historical data. As an initial candidate we are thinking about vendors' ETAs — trying to predict the likely ETA before the vendors provide them to us,” says Cioclea. In an industry where the smallest of margins — cost, lead times, stock availability, not to mention customer satisfaction — can unlock critical competitive advantage, this kind of intelligence will help Tech Data to maintain the edge.
For Patrick Zammit, the future potential of Celonis extends beyond the confines of Tech Data. If vendors and partners are also using the technology to share more accurate data around payables and delivery dates, the impact for Tech Data will be exponential. “Today, when we look at our processes end-to-end, it starts and it ends at the borders of Tech Data; but in fact, what we are seeing is the true opportunity in that supply chain is to push the boundaries to our vendors and to our partners. And in fact we start seeing some of them adopting Celonis. The partnership is very important because the more vendors and partners adopt Celonis, the better it will be for us because we will truly be able to optimize our processes end-to-end.”