INGRAM Micro is in the throes of a second wave of redundancies since its merger with Tech Pacific. At the same time, the company is closing its Christchurch warehouse.
Around 20 positions will go in the latest restructure, which managing director Tony Butler says is aimed at further streamlining and consolidating the business.
However, he adds there are also a number of vacancies at the company.
The target staff level is around 225, which is abount 10% less than the combined number of employees of Tech Pacific and Ingram Micro before their merger, says Butler.
When Ingram Micro acquired Tech Pacific a year ago Tech Pacific had 210 employees and Ingram 40, but a number of people left the companies by the time they merged earlier this year, at which time around 25 positions were made redundant.
The majority of the new round of job cuts will be in logistics, following on from the closure of the Christ-church warehouse and the halting of a pickup service from Ingram’s head office in Albany, which is being stopped due to low demand, says Butler.
Ingram’s Christchurch warehouse is set to close before the end of this month, but the company’s sales team in the city remains intact.
The decision to close the warehouse came as the company ran out of options to solve freighting problems caused by its ordering system.
Historically the system would freight goods from the warehouse closest to the delivery address, but if stock was not available there, goods would be shipped from another warehouse. This caused a number of problems, such as backorders for one city being fulfilled from another often minutes before stock became available in the first location.
This back and forth shipment of stock became troublesome and expensive, says Butler.
The company initially proposed introducing a system that would see goods shipped only from the warehouse in the city where the delivery is due, but resellers opposed the scheme as it would wreak havoc with their automated, live inventory data feeds from Ingram.
“Customers told us very loudly, don’t do it,” says Butler.
The final solution was to consolidate all freighting from one location in Auckland.
“It made sense to close Christchurch and consolidate our stock in Auckland,” he says.
Freighting is now Ingram Micro’s single largest expense, exceeding staff costs.
The matter is made worse by lower margins on hardware, says Butler.
Therefore the company is considering introducing a cheaper, but slower delivery option.
“For instance, freight on a notebook to the South Island is $18 — that is a huge percentage for a margin of $70. This has an absolute radical effect on the position resellers find themselves in,” he says.
Paul Plester, national sales manager at Express Data, agrees it is difficult to justify a South Island warehouse.
“The South Island is a freighting nightmare,” he says.
However, the benefit of a South Island warehouse is immeasurable, says Chris Rycroft,
general manager of Christchurch-based distributor Dove Electronics.
“If you have a presence and commitment to an area, people appreciate it. I think South Island resellers will be disappointed with the closure of Ingram’s warehouse,” he says.