The electronics industry is evolving at lightening speed, and electronics distributors that want to remain relevant are looking closely at the best ways to keep up with the pace of change and the demands of customers.
EBN sat down with Gerry Fay, senior vice president, Avnet and president, Avnet Electronics Marketing, Global, to talk about some of these trends and about what the company sees in the year ahead.
In fiscal year 2015, the company's annual revenue reached nearly $28 billion, making the company one of the world's largest global distributors of electronic computers, computer products, and embedded technology. Fay leads the Electronics Marketing (EM), one of the company's two operating group, which served electronics OEMS and EMS around the world and offers design chain and supply chain services.
EBN: What do you see as the key drivers in electronics distribution moving into 2016?
I would say that in 2016 our customers and suppliers are looking for solutions from distribution partners more than ever before. There are not enough chip down designs. These companies want complete solutions to add to their hardware/ software solutions. Going forward, scale and scope will matter and that will continue to be a key differentiator for us.
Relationships with customers are heading to omnichannel. Customers want to dictate experience they have, buying some things online and some offline, or all offline.
Across the board, solutions customers are looking for us to everything from embedded computing boards to embedded systems. They are facing demands for quicker time to market and embedded technology addresses that as well as the need for connecting products to the Internet.
EBN How will what customers are looking for from their distributors evolve in the New Year?
Late last year, Amazon Web Services announced a new Internet of Things (IoT) platform, which will take and leverage the pure applications of AWS. We are using platforms like that to determine the role that the distributor can play in the IoT space. We have offerings around sensors, communications, and, of course, IoT which is very important. There's a clear value proposition that we as a distributor can play in this space. We have a powerful opportunity to talk to customers in the design phase to help with data acquisition.
In terms of procurement trends, everyone is looking for the experience that they already have in their own business-to-consumer life. The four things that these customers want are:
- They want to be able to do business online. Whatever they can do offline with a distributor they also want to be able to do online. They want to pick and choose whether they will do things online or offline.
- They want us to make it easy to purchase everything they need whenever they find what they want. When a customer generates a FPGA, they also want to buy power management, for example. We need to make it easy to buy the ecosystem from us.
- They want a targeted digital market. It's not enough to be looking at marketing around a resistor or connector. They expect us to know what they've been searching for on our site, or to be able to create a desktop to store information so we can spend them information specifically about what they are searching.
- They want us to put more engineering resources online. The design engineer today does 40% to 60% of the design before they talk to anyone. If we put all the technical information that we have both internally and externally from suppliers and connect them live or via chat with a field application engineer, we can serve customers of all sizes that way.
EBN: What can you say about Avnet's plans/strategy for the coming year?
Avnet is not looking long term to get engineers to shift from sites they use today to shift to a new site. We are not trying to be a catalog distributor but rather we want to do a better job of serving constituency of supply chain professionals and engineers. We do have attributes that are like that catalog distributors that we need to provide also.
There's been different waves and different changes to the market that distributors have been overtaken and, since the early 2000s, EMS have had to be cognizant of all the folks in our space. Generally in business, if we get leap frogged by people we know, we keep an eye on them. However, there are other things to watch. To take the example of grocery stores, Walmart became a place with huge volume and to survive mom and pop stores started positioning themselves as value supermarkets. From that, you saw people put fresh and easy as a high value. They got a solid customer base from that. For us, the key differentiator and what we are looking at for the future is around demand creation. If you look at Amazon with fulfillment, they buy and sell volume and that's terrific. Customers use us because they expect us to help with technical solutions and help them put their supply chains in place. It doesn't look like Amazon and the value proposition will continue to stay relevant in our space.
EBN: What technologies/geographies/vertical markets seem most promising in the coming year? Which are waning?
We had been in embedded space for some time. IoT is natural extension of that. We are finding ways to give value in that space. We think that will be compelling if we can help them build their ecosystem. We think this will be a key value proposition as IoT matures. One of the things is that we've been in IoT for a long time, before it was cool. The Things piece is fairly well known to us and most would associate that with the electronic manufacturing business. However, the key differentiator for us is to leverage solutions and the software of the technology solutions group. We are adding an Avnet IoT team leader to help us call on folks in that customer base, including software integrators and solutions architecture, the glue of the value proposition of growth.
We don't make markets; we follow markets. We look at what customers and suppliers want us to do to and use that, and market trends, to lead investment strategies. We believe that there is better growth and margins in selling solutions. Our investments will be big for IoT, and we believe that we can derive more value from data collection and analytics than any other space.