Business Activity

Procurement

Bechtle meets the risks in the supply markets with selective supplier management. However, the effectiveness of these measures is limited with respect to the development of the international supply markets. For example, should the current price slump persist for an extended period, this could endanger the group’s profitability.

Bechtle procures its products from all renowned manufacturers and distributors in the IT industry. Across Europe, the company cooperates with about 300 manufacturers and more than 600 distributors. Should a partner be unable to supply goods, Bechtle can always offer alternative products at short notice. In terms of its economic situation and existence, the group does not depend on any single supplier. However, Hewlett-Packard products do feature strongly in the product portfolio of Bechtle AG.

The development in the IT market points to intensive competition among manufacturers. As a result of the competitive pressure, the expectations from their sales partners are on the rise. Therefore, Bechtle maintains cooperative and professional relationships with manufacturers in order to fulfil customer and manufacturer requirements in the best way possible.

Bechtle minimises storage risks and reduces the capital tie-up by continuously improving the procure- ment, throughput, and sales processes. The principle is to procure goods only shortly before they are shipped to the customer or to engage distributors as fulfilment partners. As the ordered goods are often shipped to the customer directly by the manufacturer or distributor, the company can save process and storage costs.

In order to avoid supply bottlenecks due to the short-term storage, the procurement processes are closely interlinked with the manufacturer and distributor systems. This ensures high availability and quick delivery to the customer. Bechtle also benefits from economies of scale from the group-wide volume bundling through central procurement and logistics processes.

Service Range

In the field of managed services, long-term contracts account for the major part of the business. The fixed price guarantee that is often agreed for such projects can affect the generated margin due to changes of the cost basis during the term. Moreover, such contracts contain specific requirements for the project flow and for the compliance with legal regulations. Failure to meet these criteria could lead to damage claims or termination of the contract. Furthermore, in its capacity as general contractor, Bechtle bears the risk of contractual fines due to missed deadlines, unforeseeable developments at the project sites, deficient services of subcontractors, and possible logistical difficulties.

Customers

Broad medium-sized customer base makes Bechtle independent of large customers

Although individual companies of the Bechtle Group are somewhat dependent on a limited number of customers, the group as a whole has a very large customer base. Thus, Bechtle’s existence does not depend on any single customer. There is no concentration of default risks on individual key accounts. What is more, the diversity of the industries that customers belong to spreads the risk of dependence on individual industry trends. Bechtle meets the potential solvency risk of customers by means of careful checks before entering into business relationships and by means of consistent debt collection management.

IT

Basic IT risks emerge from the use of computer-based databases and the deployment of ERP, controlling, and accounting systems. For example, a goods availability risk could result if the operability of IT systems necessary for smooth order handling is no longer guaranteed. This could happen due to hardware failures, operating errors, or defects in electronic data processing equipment.

The probability and extent of damage from viruses and hackers is difficult to estimate. The intrusion of unauthorised parties in the IT system could result in a confidentiality risk. Bechtle employs encryption and authentication technologies as well as firewalls to protect confidential information transmitted electronically. Despite high-level protective mechanisms and security standards, there is a danger that internal and confidential information could be used illegitimately.

For the Bechtle Group, backups are a top priority. The central computing centre in Neckarsulm, Germany, which is responsible for ensuring the operability of all IT systems, has developed a strategy of backup measures at various levels that prevent the failure of technical IT systems or at least minimise the probability of occurrence. As far as we can discern, Bechtle is not exposed to any integrity risk from incorrect processing, loss of data, or faulty storage of data.

Among other things, Bechtle protects the IT systems by means of firewalls and strict security regulations. The availability of the IT systems reflects the state of the art. Additionally, Bechtle protects the operation by means of redundant data lines. At all locations, the network connection takes place via backup lines. For the stability of the IT e-commerce systems, Bechtle always employs several providers with a mutual backup function. All material production systems are redundant and subject to a high-availability agreement with the manufacturer. Moreover, the systems are protected by a UPS and a power generator.

Personnel

Performance-related compensation and consistent personnel development promote employee retention

Training, motivation, and commitment of the employees are key success factors of the Bechtle Group. Therefore, loss of expertise due to above-average fluctuation of qualified personnel and a lack of qualification and service orientation on the part of the employees are the major personnel risks. Furthermore, in the fast-growing business fields, there is a risk that the need for qualified personnel cannot be met sufficiently. For this reason, Bechtle is not only eager to recruit qualified specialists and executive personnel for the company and integrate them successfully, but most importantly to bind them to the company permanently.

Due to the intense consolidation in the IT market, there is currently no shortage of well-qualified sales staff. In contrast, the replacement of highly qualified IT specialists is more difficult in individual competence areas, which may mean a risk for the operational business flow. However, the industry views Bechtle as an attractive, reliable employer, which can be seen from the high number of qualified and experienced applicants. Apart from creating a positive work environment, the HR work focuses on operational training and promotion of junior management staff by means of internal development programmes of the Bechtle Academy.

Liability

In the service and trading business, Bechtle provides an industry-standard contractual warranty for supplied hardware according to its General Terms and Conditions. However, Bechtle only passes on the manufacturers’ warranty. The risk of warranty claims being asserted against Bechtle without recourse to the manufacturer is low. Bechtle has taken out insurance or formed adequate provisions for the case that customers need to be granted warranty extensions or expansions. A D&O insurance covers any liability claims resulting from mismanagement. The insurance cover is checked regularly and adapted if necessary. Thus, negative financial effects of insurable risks on the business should be excluded or at least limited.