Right around its 25th birthday, America II decided to start to move away from its roots in independent distribution to focus on making a place for itself in the franchised electronics distribution landscape.
"We realized that, although we've been on the independent distribution side of the business, we needed to have a broader offering to serve our customer base," said America II president Brian Ellison in an interview with EBNonline. Our goal was to continue to be relevant to our customers and to the market. We needed to move into medical and automotive spaces, which have longer product lifecycles, and really couldn't do that without a more extensive offering from a franchise line perspective."
Early returns say the company has been successful in its bid. For the first time, America II was listed on EBN's Top 25 Global Franchised Electronics Distributors list, claiming a spot mid-list (Ranking #16). At last count, the company had 66 franchised lines on its card, having added nine new lines, including Oupiin America Inc., Mean Well USA Inc., Kamaya Inc., SiliconReef, Iriso USA Inc., Fremont Micro Devices, Cal-Chip Electronics, APC Manufacturing, and NVE Corp., to its global line card in January 2016.
Taking a quality over quantity approach, the company is using a technology matrix to build its line card so that it has several lines of each type of technology to offer the customer a choice, Ellison said. "We are starting to attract some of the larger component manufacturers," Ellison said. "In end, we'll sign $700 million to our line card. It's not that we don't support tier one customers but we have a good hold on the middle tier and that seems to be an underserviced area for many of the larger component manufacturers."
In addition, the company has hired an electrical engineer (EE) to its staff to support the evolution of the line card. "She's been around and knows what's she's doing," Ellison said. "She's developed flows and processes, does training, and supports the back end of selling." The company has also added two business development managers to its forces. "The goal is to overall to slow down on number of lines, fill technology gaps, and focus on increasing sales throughout those line, " he added.
In addition to new market segments, the move to franchised lines will also support the distributors global distribution goals. "The truth of the matter is that we need franchised offerings to push into Latin America, especially regional franchise specific to the Latin market," Ellison said.
After seven years, the company also dropped its membership with the International Distribution of Electronics Association (IDEA). "That organization has made tremendous strides for the industry and helped in develop important testing standards," said Ellison. "Certainly, it's a great organization. However, the goal of that organization is to promote independent distributors and our goal is to go beyond that. We don't want to be just the guy who customers come to for shortages and end of life products." The distributor still maintains over 200 direct lines and credits roughly 40% of its global revenue to direct sales, Ellison added.
This year, the distributor has been working to beef up its e-commerce efforts. The distributor is in the midst of a pilot program with about 50 customers to test out an offering, Ellison said.
As a newcomer to the franchised world, it's interesting to note the trends that America II is seeing. "Customers are really looking for supply chain programs," said Ellison. "Vendor managed inventory (VMI) programs are popular because lead times are short and customers are expecting turn around. No one wants to carry stock at the customer level." Just in time (JIT) continues to be a major focus, he added.
— Hailey Lynne McKeefry, Editor in Chief, EBN