Always a critical component to the supply chain, distributors are evolving their approach and offerings to help original equipment manufacturers (OEMs) manage and strategically apply supply chain services and best practices to keep the flow of components moving. Especially in today’s competitive marketplace with lengthening lead times and increased competitiveness, choosing a distribution partner has become a critical activity.
We sat down with Kathy Bordeleau, director of marketing operations and Lori Rapoza, director of sales operations at Sager Electronics, to talk about the trends that they are seeing in electronics distribution, as well as to get an inside look at how one leading company is approaching the market.
EBN: How do you see supply chain management evolving as a strategic asset for a distribution company like Sager?
Bordeleau: Authorized distribution is a critical component of the supply chain for both suppliers and customers. A distributor has always played a role in ensuring the timely flow of product from suppliers to customers in order to meet time-to-market requirements.
However, today’s successful distribution model is more than stocking packages, purchase orders and shipments. Information is king and the ability of a distributor to translate information into action to the benefit of its suppliers and customers is the differentiator.
At the core of any successful operation is a robust ERP system that can collect, store, analyze and report large volumes of information accurately and consistently. Employing business intelligence software and a robust
toolset on top of a strong platform such as Sager’s PeopleSoft system allows for enhanced analysis and better decision-making across all facets of the supply chain. For example, from Purchasing’s ability to see and understand usage at the part number level to Sales’ ability to anticipate a customer-specific stocking requirement, Sager’s management teams use information to buy, manage and situate product to best meet the needs of both constituencies.
EBN: What are the critical demands from customers evolving and how is supply chain management part of that?
Rapoza: Customers wish to acquire product as close to the point of use as possible and at a competitive price. Anticipation of requirements, access to product and speed of response are crucial. Sager works closely with its supplier partners to understand factory pipelines and what’s on the horizon. As factories face material shortages, lead times extend and prices increase, it’s our role to position our backlog and inventory to provide a seamless flow of product to the customer.
Our customers want access to intelligence and are relying on us to provide it. It is the continuous flow of information from supplier through Sager to our customer and the use of better analytics that position everyone in the supply chain to make well informed business decisions. Sager is using its market intelligence to devise stronger inventory strategies. Investing in inventory including high running, customer-specific and hard-to- source products positions us against fluctuations in the marketplace and improves our ability to mitigate potential supply chain issues for our customers.
Additionally, through our Power Solutions Center and staff of in-house design engineers, Sager can build sub- assemblies in a quick and efficient fashion to meet customers’ more complex design requirements. Understanding a customer’s technical needs and having the ability to quickly address those specifications through a value-add solution is another example of how Sager is using intelligence to meet demands faster and more productively.
EBN: Going forward, what focuses and directions does Sager need to take to continue to evolve in terms of supply chain?
Rapoza: Given the importance of communication across the supply chain, Sager continues to look for ways to automate and improve the flow and value of information. But information goes beyond reports and tools. Information is having a technical sales team that can assist customers with the often complex requirements associated with certain products. When it comes to power supply and thermal management products, Sager’s sales engineers understand the latest technologies available in these design intensive products and can provide the attributes, datasheets, images and associated materials needed to help an engineer select a solution for their application.
Sager’s sales engineers work in conjunction with a field sales representative under a dual account coverage model combining technical knowledge with sales expertise to address the engineering and purchasing needs of our customers. Sager also assigns an inside sales representative who manages the day-to-day activities of the account. This year Sager will add 10 percent to 12 percent more inside sales resources to the team. This additional coverage translates into focused account management, higher levels of customer service and increased speed of response.
This Distributing Confidence model and the importance of exceeding customers’ expectations are ingrained within Sager’s 131 years of business. However, we recognize that the world is evolving and a segment of our customers have requested the ability to manage their own accounts. While Sager offers a level of online order functionality today, we are in the development phase of an expanded online self-service model. The primary objective will be to provide customers with the ability to search for inventory using their internal part numbers and to provide them with a view into their bonded inventory and special pricing in a secure environment. With an anticipated fall launch, Sager customers will soon be able to better view their order and quote history, place backorders, and request change orders through the system.
EBN: People, process, and technology are the critical components of successful business. Can you talk about the ways Sager is approaching these aspects in their supply chain initiatives?
Bordeleau: Sager is constantly looking for ways to engage more deeply with our suppliers and customers. Our sales team is equipped to offer a variety of programs to support all levels of customer needs. Forecast planning, bonded inventory, blanket purchase orders, consignment, and special programs such as labeling are all available with varying services employed to address customers’ specific needs.
What it comes down to is having a Sager sales representative, well versed on the account, who can understand a customer’s materials requirements and translate that information into a forecast to bond and pipeline inventory accordingly. Toward that end, we are currently working on enhancing Customer Forecast Planning within our ERP system to ensure a more seamless flow of information from the purchase of inventory to order placement.
EBN: Lately, we’ve had a large spate of weather related disasters. How do you see distribution being a component of the recovery strategies of its customers?
Bordeleau: From supplier deliveries to customer receipts, the weather can impact all areas of the supply chain from time to time. In knowing what part of the world our suppliers build their products and reacting to these specific world situations, we work with our suppliers to provide the most up-to-date information when disasters occur. We will also move quickly to lock down valuable inventory for our best and most loyal customers.
If given the ability to forecast such situations, like hurricanes and winter storms, we will often move to pull in shipments ahead of certain events, but other natural disasters strike without warning. By far the most effective remedy is our ability to work from a strong inventory position, multiple facilities with system redundancies and an established continuity plan that affords Sager the nimbleness to react to whatever Mother Nature throws our way.
This fall Sager will be unveiling its new Power Solutions Center and distribution facility in the Dallas-Fort Worth area. Centrally located in the middle of the country, the new Power Solutions Center and warehouse will house power supplies, thermal management solutions and specialty product sourced to meet growing value-add demands. The new 63,000-square-foot facility will be on the same warehouse management system as our 100,000-square-foot distribution center in Middleborough, MA, which will allow for better pipelining of product and the ease of re-routing product when weather or other issues necessitate a change. Sager has expanded the hours of operation at our primary distribution center to meet increasing demand and maximize available production time. The newly introduced third shift operates from 3:00 p.m. to midnight EST to allow for increased production, inventory control, cycle counts and re-warehousing tasks. Sager recently hired two new supervisors to further build out our distribution center leadership team; both individuals bring to Sager lengthy careers in distribution and operations management.
The addition of a second, centrally located and fully automated distribution center, the expanded hours of operation at our main facility and the ability to place inventory close to our customers through our third party logistic partnerships ensures Sager can quickly and efficiently respond to any requirement.
EBN: What are the most important trends in high tech electronics distribution? How do you see the competitive landscape and demands of customers evolving?
Rapoza: Flexibility, efficiencies and speed of response are the hallmarks of a good distribution program. The demands of customers are many of the things we talked about today. Customers want information and we are in the information business: better analytics, documentation, part number usage history, and ideal stocking levels. Customers want access to online tools, configurators, insight to their orders, backlog and special pricing.
Customers want more value from distributors than just fulfillment; a specialist approach in terms of knowledge, design specification assistance and the ability to provide value-added services.
To read more from the EBN/EPS News 2018 Top 50 Global Distributors Report, click here.
— Hailey Lynne McKeefry, Editor in Chief, EBN