Riverside Brokerage (CASE STUDY FOR QUESTION 3) Barbara and Wayne Mensal are both former ‘Blue Chip’ workers. They left their high-flying City jobs to set up a computer brokerage firm five years ago. When they started their turnover was 1.5 million pounds ( & #163;1.5 million), from very little effort, now it is & #163;3.5 million. They sourced their products from the ‘blue chip’ organisations they had worked with, they both have great expertise in mini-computer hardware and software, and as technical directors they dealt with the purchases of large amounts of costly information communication technologies – in short they were well placed to start a brokerage and their success is not surprising. How does a brokerage work? Barbara explains: “Firms buy new and used equipment every day, what is ‘old or used’ to one firm becomes new to the firm that purchases it. Brokerage is not just about new to used movement, some firms invest in equipment and for one reason or the other at times do not even receive and use it – they get taken over; it could be wrongly specified equipment which hardware suppliers and software developers refuse to accept responsibility for; etc. So they turn to us – computer brokerage firms. We take this equipment from them and find a buyer – we are the ‘great middleware’, the people in the middle who do the bidding, get the price right and for our troubles either get a commission or sometimes literally buy the equipment from one firm and then sell it on to another.” Wayne tells us what happens in some depth: “We are constantly on the phone buying and selling, our database holds records of those we buy from and those we sell to regularly. So Barbara and I and know what our customers at both ends want, and it is a case of matching both sides. We have a warehouse that comes into action when we are either holding onto equipment in transit or when we have failed to make that crucial deal over the phone. Failed being the operative word, the idea and ideal is that we should have zero items of stock in our warehouse at the end of every month. Every stock item that is not sold is a cost to us; we are in the business of moving stock not holding on to it. Space is costly, so we choose not to own any warehouses and we rent warehouse space as and when it is needed. This is another activity that requires monitoring. If we cannot sell certain items by the end of any one day we have to store them somewhere. It then becomes a case of looking for storage nearby, so that we spend the minimum on transportation otherwise our profits are eaten into. So we play the waiting game at times getting the sellers to hold onto the equipment until we can find a buyer. This is not always possible or advisable because our competitors can get in there and under-cut us, so we have to be careful. If the equipment is a ‘must-have’ in the business then we grab hold of it and stock it. So you see there are many activities that the brokerage has to carry out. It is not just buying and selling, it is a lot more. We have to know both sides, (our customers are at both ends of the chain). If we are to complete the chain of events in the shortest time, for time is truly money in our business, our database has to be robust. We have to know who is looking for what when, that is dates and times, including an expiry date (the date when if the equipment is not found it is no longer required), the specification, the quantity, every detail about each item has significance, therefore we have to record this data carefully. We also need to deal with reputable firms, because for instance if equipment is in dispute we cannot buy it nor sell it on. Our business to say the least is frantic, crazy! I do not know how we stay married: she shouts, I shout, we all shout: it’s a marketplace! We can get very excited on our trading floor. We start normally at 7.30am and do not end our day before 8.00pm. We communicate via sign-language, and telephones, linked to computers with specialised brokerage software; these are not really adequate for the modern brokerage business. More sophisticated information communication technologies are needed in the brokerage firm. The technologies are internet based and the advantage is linkage. We have to see our goods moving from our seller to our buyer and keep tabs on them. The movement of equipment from seller to buyer, or via our warehouse is monitored by special software, linked to our databases, but the physical movement is done by specialist hardware removal contractors, so we have to be linked into their systems too. Our customers on both ends want and need to be kept in the loop so that our payment systems work, so the questions of confidentiality and customer relations are becoming even more crucial.”