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CEO Blog

11/10/2012

Dreams During Company Appraisals

Our entire industry is in motion: While we have already purchased two companies this year, some other competitors seem to develop differently....

Our entire industry is in motion: While we have already purchased two companies this year, some other competitors seem to develop differently. Already two "multi-nationals" may soon fall again into their formerly separate parts. Another, however, our "favorite competitor" reports falling sales figures in the last quarterly report. From our perspective: no surprise.

Right now I have more or less five concrete offers on the table for acquisition opportunities. Some of the companies have become too small for the market, have problems with the banks, or no longer fit well into the vendors' channel strategy. That would be a nice opportunity to increase our growth even further, were it not for the unpleasant question about the corporate assessment of potential candidates.

I often do not know if I should laugh or cry. Here is a selection of misguided assumptions from company owners ... I declare that I have heard all these phrases in at least five languages:

- "My company makes 15% margin in distribution, and will always remain so. No, there is no trend towards declining margins. In my country XXX it is quite unlike anywhere else."

- "It does not matter what the company is worth! The purchase price must be high enough so that I can comfortably retire!"

- The escalation: If there is more than one owner, then the purchase price must also be higher, because they all want to retire comfortably.

- "No, I cannot give any guarantees for amounts outstanding or the stock value, of course. Assume that everything is 100% recoverable."

- "Actually, the company would have earned much more, but I'm paid such a high salary." (because of course the company does not need Management anymore after the acquisition)

- "We only make losses, because we want to save on taxes."

Not even our American competitors fall for something like this. :)

In most cases once a vendor makes the decision to terminate the contract with the distributor, the company's value suddenly drops to zero or below.

My dear people, we live in 2012. There was a financial crisis, and acquisitions always have to be cash-positive. This is possible, and can also be good for both sides. But without a more realistic view of things, it does not work. As you know, one can not bake equity.

Anyway, I will tirelessly continue to negotiate (I am, after all, paid to do so), and go and find a creative solution. But in case of doubt, we prefer to grow "organically" rather than pay a lot of money for others to retire on.

01/10/2012

The company is quiet and peaceful: closed in the mornings, and the afternoons too :)

I just had to smile when a competitor's mass mailing reached me....

I just had to smile when a competitor's mass mailing reached me. "Due to stocktaking no goods can be shipped for two days." Mind you, this is a distributor, no vendor who can plan longterm.

And the warehouse is also not closed on 31 December, but rather, two days in Q4, the strongest quarter of our industry. Add to that that this company also lives from distributing devices which should precisely simplify this stocktaking process. It seems rather embarrassing.

Quick logistics is the number one priority in distribution. Therefore, there is a "perpetual stocktaking", or one does this once on a weekend. But why should I get upset: of course our sales team will support the competitor's customers on these days.

14/09/2012

A scare and a surprise early in the morning

You know that we actively promote our creative and flexible logistics, but here is an example from the day to day that surprised even me this morning:

...

You know that we actively promote our creative and flexible logistics, but here is an example from the day to day that surprised even me this morning:

Every night we drive to the DPD depot in Linz, Austria with our own small transporters, so that we can hand over the packages for the alpine country before midnight. Only via this powerful endeavor (1,100 kilometers every night) can we ensure that our packages will be delivered in Austria the following day.

Last night one of our vehicles was involved in an accident (though not his fault). Thankfully, the driver is ok, except for a few bruises. The accident occurred shortly before 11pm, one hour away from the DPD hub. Instead of driving to the hospital for safety's sake, our driver had the vehicle towed for an entire hour to DPD. Only after all the packages were unloaded in time did he head for the hospital to be checked over. And the packages arrived punctually today at our customers. Mission success. Unbelievable.

It is of course right to say that such "hero's action" is irresponsible, and that personal health trumps everything. If the hospital had found something more seriously wrong, we certainly would not have been happy today. However, the deed greatly impressed me, as did the coordination and decision making during the night. A special commendation to you!

06/08/2012

Jarltech Beerfest in Shenzhen-Shekou

Paulaner beer is being brewed in China for a long time now. Beer connoisseurs say, however, that it tastes different than the Paulaner beer you get in Germany....

Paulaner beer is being brewed in China for a long time now. Beer connoisseurs say, however, that it tastes different than the Paulaner beer you get in Germany. Since I am not a beer drinker, I can only rely on them, and concur that the imported beer tastes better.

Timely enough, this coming Friday, August 10th the first Jarltech Beerfest will take place in China. In Shenzhen-Shekou we found a lovely beer hall, supported by Paulaner, and run by a German.

We have invited 120 guests to this Bavarian-designed event - and we received 120 acceptances. Something worth mentioning: the customers are not all from the local area, but rather, from all 10 of our Chinese offices, where the most important customers were invited. Taking part are 60 top customers, with whom we will spend the weekend after on Hainan Island. So, for these customers, the Beerfest means more stress than for a normal trip.

When we plan events in foreign countries we always try to make it as local an event as possible, as if we were a local company in that particular country. We started our business in China with this approach but had almost squandered an important essential strength. Because here the German (and European) roots make a good impression.

The Beerfest is also the release party for our first Chinese catalogue. Just before printing we removed our Asian cover girl and replaced her with our blond European model. The unanimous opinion of our Chinese marketing employees was: great! Now we just have to teach our Chinese customers to drink beer! :)

Ok, so maybe I should look for my Lederhosen for Friday...

28/06/2012

End of the quarter panic

My 10 favorite vendor quotes at the end of the quarter:

...

My 10 favorite vendor quotes at the end of the quarter:

1) We normally do not exert warehousing pressure on the distribution at the end of the quarter, and haven't for years. This time was an exceptional situation.

2) Mr. Spranger, of course no other distributor will receive this offer!

3) You can be sure that we will deduct the additional turnover now from your next quarterly goal.

4) But if you take these 100 pallets now, then we won't have anything left and you can be the sole supplier!

5) We simply expect a distributor to store goods for seven or eight months sometimes.

6) We will not leave you hanging with leftover goods!

7) You have to accept these three truck deliveries because in the next quarter we want to do business with our small direct partners via you.

8) This large order is very important for your reputation at our headquarters in the USA/Japan/....

9) If you have to rent an additional warehouse, then of course we will pay for the storage costs.

10) We restructured during this quarter and that is why we are unable to deviate, particularly in this quarter.

And yes, our warehouses are popping at the seams, and yes, we are looking forward to the nice products, but honestly, where will you find a manager who has the backbone to honestly tell his boss or the stock exchange that the market is like it is, and that every advanced quarterly business leads to price and profit erosion. And where will you find a stock holder who takes the time to check out what goods are being pressed through at the last minute - because these altered figures are not appropriate for corporate leadership and rating.

But what am I talking about? With us on 31 December it is exactly the senseless opposite, because we need as little inventory as possible due to Basel II. Even this indicator holds no weight regarding the value of the company, but why should I fight against windmills. :)

Ok, enough complaining. Now we need to make space, because on Monday the deliveries from 29 June will arrive. And some vendors who need three weeks to answer a simple delivery time question can suddenly deliver pallets, even on Saturdays. :)

22/06/2012

Love China!

For the past two hours, I have been sitting in the car on Hainan Island, on the way from Sanya to Haikou....

For the past two hours, I have been sitting in the car on Hainan Island, on the way from Sanya to Haikou. We had a successful "Mobility Weekend" in Sanya together with Honeywell and Elo Touch Solutions, but the trip back decided to be difficult.

Unfortunately a typhoon stopped by, making the weekend a bit more challenging. It only rained once though over the weekend - it started on Friday night and ended on Monday afternoon.

Bernd, who flew back to Shenzhen with the main group of travelers, spent the night in the airport and could see first-hand how the flight passengers banded together and made the check-in crew's lives miserable, until they ended up apologizing for the bad weather. Afterwards they stormed the First Class lounge. But it did not help: if no plane can land because of bad weather, then of course no plane can take off.

So, the entire group went via train to Haikou, without any sleep. There, the airport was also closed, but not quite as much as in Sanya. Instead of arriving on Sunday afternoon, our employees arrived at home on Monday night.

Since I did not need to go to Shenzhen, but rather Shanghai, I am just now driving through the car wash. Every few minutes I get a call telling me which flights have been cancelled and which have not. In China, they do not like to admit failures, and on the official airport websites it looks like "business as usual". Sanya alone has cancelled 75 flights, which are all on time, according to the website.

But the reality looks different. My driver takes me and my bottle of red wine through the night for hours, to bring me from the closed Sanya airport to the newly reopened Haikou airport. Then I get a call that my flight was cancelled, but that the flight one hour earlier will depart on schedule. I kindly ask my driver to step on the gas, but: he suddenly stops and steps out of the car. I thought I asked too much of him and that he was going to throw me out into the typhoon.

But: "Sorry, Sir, I can bring you to Haikou on time, but I have to cover the license plates." and he places covers over both the front and rear license plates. And just like that, you can drive 200 kph in China. Cool! Don't let anyone ever tell you that the Chinese do not have creative solutions.

As much as I could tell in the rain, we were caught by speed camera eight times, and we have been driving for two hours with our hazard warning flasher on. However, Hainan has brand-new highways, so that I can comfortably work on my laptop while drinking my wine. Love China!

The most important piece of knowledge about the stormy weather came from my mentor, Y.S. Chang, who sat completely relaxed with a cup of tea as the rain flooded the grounds: "Rain is good. Rain means money." Ok then.

You can see pictures from our Sanya trip on www.facebook.com/jarltech

05/06/2012

Logistics on Public Holidays

We do 40% of our business in Germany. But does that mean that on a public holiday we suddenly cannot help our customers in France or England?...

We do 40% of our business in Germany. But does that mean that on a public holiday we suddenly cannot help our customers in France or England? Why should a customer in Belgium have to wait longer for his order? Normally the customer does not even know that our warehouse is in Germany.

Even worse is when the public holiday does not affect all of Germany, as is the case with this coming Thursday. Hesse is closed, and of course, the shipping companies in Hesse. Should we let our competition take our customer from Hannover away from us, just because he needs his delivery on Friday? I think not.

If we tell a customer in Luxembourg or Poland that Jarltech delivers everything the same day, than we need to do so. Effective immediately our warehouse is open on public holidays with a smaller workforce, and our Sprinter fleet (trucks are not allowed to drive on public holidays!) delivers the packages simply to the shipping companies' foreign hubs. After France and Austria we are already on the go daily with several vehicles.

On such days our technical department has an emergency crew who speak the languages of the countries which are open, plus our sales departments in the open regions are also on duty.

This all costs a lot of money, especially when the public holidays are not the same throughout. Why aren't there a few general public holidays in Europe that (almost) everyone could agree to, like Christmas, for example? If the six other public holidays would be taken away, then by law every employee would automatically receive six additional vacation days... which would already give us better results, not to mention an increase in economical productivity.

However, it could be embarrassing for the church, if hardly anyone takes the day off on Ascension or Easter Monday, but the church would certainly survive. When it comes to globalization it becomes increasingly difficult to always have to deal with special national rules and regulations.

10/05/2012

Jarltech grows in France

The French auto-ID distributor Accuscan has joined the SMB Group and will change its name to "Jarltech France"....

The French auto-ID distributor Accuscan has joined the SMB Group and will change its name to "Jarltech France". SMB Group is the parent company of Jarltech Europe, Jarltech UK, Jarltech Southwest, Jarltech Austria and Jarltech China.

The transaction will be completed in May 2012. Accuscan currently follows a clearly defined channel-oriented distribution model for AIDC dealers in France. The main brands represented are Datalogic, Zebra, Evolis and TSC. The company is based near Paris and employs six people. The planned turnover 2012 is about 7.5 million euros.

Jarltech Europe already operates successfully in France and will transfer a part of its current business to Accuscan, which will make Accuscan more than double in 2012 compared with the planned figures.

"Through Jarltech, the business we built over the last years will now grow even more and offer many more services to our valued customers. With size comes improved product availability and faster service," says Jean-Luc Crozet, CEO of Accuscan, while Ulrich Spranger, CEO of Jarltech Europe, comments: "I am very impressed by the Accuscan team, and I am very happy to welcome more AIDC experts to the Jarltech family."

It was agreed between both parties that details about the transaction will not be released to the public.

The SMB Group consists of different distribution companies for AIDC and POS products in 25 locations in Europe, the Middle East and China. The group employs 175 people and plans to turn over 155 Million USD in 2012, after reaching 106 Million USD in 2011. The main brands represented are Zebra, Epson, Honeywell, Datalogic, Elo TouchSystems, Citizen, Getac, HP PoS, NCR and Panasonic.

27/04/2012

Why Asia?

During the last few days, I was asked one question all the time: Why does Jarltech expand to China, Hong Kong and Taiwan?...

During the last few days, I was asked one question all the time: Why does Jarltech expand to China, Hong Kong and Taiwan? After Europe and the Middle East, would it not be America's turn now? What about the USA, where all our competitors have their headquarters?

Simple: we do not dare to. Expanding to China is much easier to handle for us, than the USA would be. In China and Taiwan, we already have employees, we already have been doing business there for over 20 years, successfully, and we have a network.

And as a distributor, we need the support from the vendors. But the vendors in the USA frighten me somewhat. Some American competitors open up an office in Europe, without any business. Then, they demand sales rights from notable corporate groups: "We are the No. 1/2/3 in the US, after all, give us a distribution contract for Europe or we will change our mind about the US." And some vendors actually agreed to this. At that time, we received phone calls telling us this: "Sorry, the whole European office tried to prevent this, but apparently, our American colleagues are prone to easy persuasion." And that is a market I do not want to be a part of... yet. We would never put pressure on a vendor to get sales rights in North America. And we would not be successful either, as the US market is much larger than the European is.

So we prefer going into the Middle East and China, to offer our vendors more presence. The larger areas have not yet been made accessible there. US distributors do not like these areas, besides customers there often do not like American distributors any better. We need to take that detour first to grow big enough. Only then will we be able to enter the USA, where concepts matter less than sales results for the quarterly reports and the stock market. It is unbelievable that peers from American distributors tell me openly that "value-add" is "bullshit" - only sales count at the end of the quarter. Customer benefits are only ever found in PowerPoint dream slides.