Avnet Americas Reorganizing

Avnet Electronics Marketing Americas is reorganizing the way it goes to market in its 48 branches. Executives told us the new structure will unify Avnet EM's product offerings throughout the region and utilize its specialty divisions more effectively.

"Within our more concentrated markets, our specialty structure works really well," Ed Smith, president of Avnet EM Americas, told us. "In other markets, we need to reach out and touch more customers with more products."

Currently, three specialty divisions -- Avnet Electronics Marketing, Avnet Memec, and Avnet Embedded -- sell and support their respective linecards throughout the Americas. Those divisions will remain intact in 15 markets. In the other markets (which the company now calls "EMA" markets), all products and services provided by the three specialty units will be combined into a single, unified linecard. "Instead of having three people selling parts of the linecard, we have nine people selling the whole linecard," Smith said.

The new structure will also streamline customer interaction within the Avnet branches. Currently, Avnet Memec sells a limited linecard of semiconductor products. Avnet Embedded sells motherboards, chassis, and subassemblies, and Avnet EM sells the remainder of the product offerings, including IP&E. Customers may deal with as many as three Avnet salespeople to source a BOM. "Now these accounts can be handled by a single person," Smith said.

The reorganization does not redeploy FAEs or technical support services within the branches, Avnet said. These resources are simply no longer tied to a specialty division.

The working model within Avnet refers to markets as "specialized" of "EMA." In the Northeast, for example, the specialized markets include Boston, Philadelphia, Baltimore, and Rochester, N.Y. The EMA markets include Connecticut, Long Island, and New Jersey.

The distribution market in general continually reevaluates how to deploy resources. Distributors increasingly have been hiring engineers to help customers with design and bring increasingly complex products to market. In sales-driven businesses such as distribution, engineers are expensive. Distributors have to allocate their technical resources where they will be most effective.

In addition, broadline distributors such as Avnet Inc. (NYSE: AVT) and Arrow Electronics Inc. (NYSE: ARW) are competing with catalogue distributors for small and emerging customers. These accounts typically source a wide array of products in small volumes, and broadlines have been struggling to provide the right mix of products and services to this diverse customer base.

Avnet's restructuring affects only the Americas and will not be rolled out globally. The Americas market has not been growing as quickly for Avnet as markets such as China, and the distributor says it wants to increase its marketshare.

"You have to touch more customers to fuel growth. If the market isn't growing, the way you increase your marketshare is to increase your customer base," Smith said.

I think the Americas customers have changed the way they want to be serviced. They want the option of dealing with you face to face or call you up or go online. We have to make it as convenient as possible for customers to do business with us. It's pretty simple, really -- we have to touch more customers with more products. Our success will be measured in more customers, more sales, and profitability.