Electronics components suppliers are part of the trend that's driving distributors further down the design chain. As their engineering resources are cut, component makers are focusing on supporting only their largest customers, leaving distributors to pick up the slack.
“Many [of our suppliers] do not have the resources to support the broad and growing customer base and rely on us to do that for them,” says Peter Kong, president of Arrow Global Components. “In turn, they provide us with product information, application knowledge, training, factor resource access, among others. The best suppliers with the best distribution programs recognize and leverage our capabilities.”
Additionally, broadline suppliers, such as the former Motorola Semiconductor, have split themselves into small specialty companies. These suppliers are no longer one-stop shops for a variety of semiconductor products. Customers now can choose among the “best of the best” component technologies but have more suppliers to select from.
Distributors that are franchised by these chipmakers cull through the various product offerings to assist customers in making the best selections for their applications. “Information exists on the Web, but someone has to come in who is non-biased, can cull through that information, and provide the best solution in a cost-effective way,” says Lindsley Ruth, corporate vice president at Future Electronics Inc. “There is so much information available it can get overwhelming.”
However, all this engineering assistance comes at a cost: Distribution is, first and foremost, a sales-driven business model. High-salaried engineers are a fixed cost in these organizations and have to be deployed toward distributors' most profitable opportunities. Distributors are trying to scale their design services toward a highly segmented customer base.
“Arrow's goal is to provide services that will satisfy [customer] needs, and we invest accordingly to deliver our value proposition,” says Kong. “Our large customers typically do not require design support, but need a complex supply chain solution, which could also include services like programming, end-of-life services, and reverse logistics. Our Arrow Alliance model fits this well.”
Distributors can spread the expense of hiring engineers over a customer base that numbers in the tens of thousands. “The middle 30,000 customers require full service and local support,” notes Kong. “These customers are supported by our field engineers and extensive global network. Arrow has a terrific offering for our small and midsized customers that include a host of Internet capability, access to a large pool of inventory, and tailored support. Our suppliers appreciate this approach as it allows us to present their technology to market at all customer levels and help them identify the best prospects for their latest offerings.”
Within distribution companies, engineering resource have shifted from a largely supplier-focused model — a field-applications engineer (FAE) dedicated to Texas Instruments or Infineon Technologies, for instance — to a technology-focused model. FAEs are now analog experts, FPGA experts, or have another type of specialty and are trained through the combined efforts of distribution companies and suppliers. Arrow and Avnet, for example, host several-day-long programs that include suppliers and customers. Programs such as Avnet's X-fest and its Speedway and On-ramp programs are intensive hands-on training sessions, says Ed Smith, president of Avnet Electronics Marketing, Americas.
Arrow hosts its Arrowfest training seminars in cities around the world. “We have developed better, more sophisticated coordination with our suppliers to work together to provide solutions for our customers,” says Kong. “We can assist our customers in every phase of their design, from new product introduction through end-of-life. The best suppliers appreciate Arrow’s capabilities and results, and have developed programs that recognize that in many ways.”