The heyday of electronics distribution expansion was undoubtedly the 1990s, when top-tier players Arrow Electronics Inc. (NYSE: ARW), Avnet Inc. (NYSE: AVT), and VEBA made acquisitions that positioned them around the globe. North America-based Arrow and Avnet moved into Europe and Asia; Germany's VEBA moved into the US.
A second wave of expansion has been happening more slowly and with less fanfare in the past 10 years as companies round out their global presences. Distributors expand primarily in two ways: by greenfielding (opening offices in foreign locales); or by acquisition. Asia's World Peace Group, which has opened offices in North America; Future Electronics and TTI Inc. , which have expanded into Europe and Asia; and catalogue distributor Mouser Electronics Inc. are among those that use the greenfield approach.
Mouser, for example, opened six new offices in 2011 to bring its global total to 19. "We've opened offices in Sweden, the Netherlands, the Czech Republic, Taiwan, India, and Thailand in 2011," says Kevin Hess, vice president of technical marketing for Mouser. "Those are areas where we already have customers and see the greatest opportunity for growth."
Mouser focuses intensely on the design and engineering market. A classic catalogue distributor specializes in low-volume, high-mix orders for design, engineering, and prototyping. In theory, a catalogue can support a global customer base through a single mega-warehouse location staffed by sales and support personnel 24/7.
Mouser is taking a different approach. Each of its offices is staffed with sales and marketing staff and technical support. These staffers work in the same time zones, the same language, and in the same currency as their local customers. "We want to support our customers during the hours they are working," says Hess. "They don't have to figure out what time it is somewhere else so they can place an order before the close of the business day."
Mouser's Website also provides foreign language and foreign currency options, but the company feels strongly about having a local presence. "We feel that we should engage with our customers anywhere and at any time they need," says Hess. "Particularly when it comes to technical support."
Orders are managed through Mouser's central warehouse in Mansfield, Texas, which provides expedited delivery options. Since the company is committed to having new products on its shelves before the products are even announced, maintaining inventory carries some risk: Mouser sometimes announces three or four new products a day. "We realize that it is a value to our suppliers that we focus on and carry their new products," says Hess. "Maintaining good relationships with our suppliers means that sometimes inventory has to be moved around or returned. That's a risk we are willing to take."
The global aspect of electronics distribution is becoming increasingly complicated as foreign companies compete with indigenous distributors in all regions of the world. In the next few months, EBN will be looking at how the channel is shaping up in the globe's major electronics regions and how those profiles may change over the next 10 years.
@t.alex: in the rep model, which I think is comparable to "freelancer" their charter is to push their suppliers' products. Reps do not carry directly competing lines. A typical rep will carry Molex lines, but not TE, or vice versa. It is up to the reps to convince the customer of the value of the products. Distrbutors, on the other hand, will recommend the device that best fits their customers' application. That is a change from the way things used to be done, when a distributor was incentivized to favor one supplier over another. Suppliers are beginning to accept that their technology wins a spot on the board, not just the efforts of their sales channel.
With the great advancements in information technology and the expansion of engineering development centres into varios parts of the world it has become essential for the distributors to open the local offices and also provide support during local business hours. Certainly this expansion will help them to make more profits with in a year after the investment.
For freelancers, this is the most source of income. Hence they are more sincere compare to salaried engineer. They work odd hours, 18 hrs a day and on weekends. For them, retaining customer in of paramount importance.
As regarding parts, they will employ most appropriate part and first look after customer's interest. Else, they can tell customer upfront that they will use specific vendor part because he has good support for them.
Typically the freelancers might have used certain components before and they are very familiar with these. How can we ensure that these guys will recommend your parts, but not competitors' ones. Some incentive schemes have to be worked out.
While I like your idea, I see it hard for them to adopt them. They talk so much about the identity and culture that by definition, a freelancer is not going to share or know.
You might use them to do some BUA but for more complex projects, you need someone that can relate and have the same goals as the company.
Basically, these freelancers are accomplished designer, application engineer with very good inclination towards marketing and commerce. They can provide all services similar to Arrow or Avnet and others - parts selection, refernce design, design check, debug etc.
Basically they are all-in-one sales, FAE and design expert. Only limitation is they can serve few tens of customers local to them. Advantage is that, thier response is very quick, low in cost and more genuine.
This will work very well and it should be explored more.
Funny you should mention that! I've actually prepared a blog on that topic. Briefly, though, most of the value-added efforts are taking place on the front-end of the relationship: providing design and engineering assistance to OEM customers. This is in addition to the standard order fulfillment and logistics services distrbutors already provide. And they are working on strategic supply chain prodcuts and packages, whihc I will blog about next week.
Most of these services are being rolled out globally, BTW. Distributors want to provide the same expereince for their customers whether they are in Dallas or Beijing.
Barbara, The blog discussed distribution's growth strategy from the parts business. What are they doing to expand business globally in the areas of value-added service? How effective do you think they have been or will be in this area?
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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