Channel Insider content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.

Tech Data reported March 8 that its profit rose 22 percent in the fourth quarter.

There are no doubt many reasons for this — its European realignments are finally paying off, the market grew over all and business process changes like a new SAP system are coming online.

But Tech Data’s CEO, Robert Dutkowsky, attributes the rise to his company’s ability to keep up with the market music, making investments where it counts and moving away from those market segments and solution areas that are unlikely to pay out.

Chief among those is the SMB (small and midsize business) market, where Tech Data has moved significant sales resources, calling on thousands of new VARs to bring more product from more vendors to more SMB users than vendors could ever reach alone.

But the distributor community’s value proposition goes deeper than the ability to dial the phone a little faster, Dutkowsky said.

“Credit is our most powerful tool,” he said. “It’s a key to our value proposition in the channel. Every vendor and solution provider out there is scrambling over each other to reach the SMB and they can’t do that without the distributors’ ability to carry credit.”

TD is floating several hundred million dollars of credit at any one time, ensuring that solution providers can source the product and manufacturers don’t carry that debt on the books, Dutkowsky said.

“If the solution provider can’t get credit from the manufacturer, he can’t afford to carry the product to market,” he said. “And the manufacturer can’t afford to carry that kind of debt and continue to manufacture. We can, and that’s why there will always be room for several strong distributors in the market. There is plenty of room for Ingram Micro and Tech Data because there is a tremendous demand in the market for more credit.”