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The Constant Battle to Provide Value

The distribution industry has several distinct business models for a reason: Every customer profile is different. DIY-ers, labs, hobbyists, and small and emerging customers most often turn to catalogue distributors for low-volume engineering orders. Though some houses still publish paper catalogues, others that specialize in the low-volume, high-mix order profile prefer the term “high-service distributor.”

Few distributors that survived the consolidation wave of the 1990s and the recent downturn can be considered low-service providers. The competition remains brutal. But distributors must continually find new ways to offer value to their customers. Even catalogues, which specialize in providing the fastest, most efficient order processing available, strive to differentiate themselves from one another.

Sometimes that means breaking the mold. It seems counterintuitive not to recommend a part for a developing design, but that's exactly what some distributors will do. Kevin Hess, vice president of technical marketing for {complink 12816|Mouser Electronics Inc.}, told us that not every part is suitable for a new product design.

“There are parts for which we already know the date suppliers will end production,” he said. “When you focus on design engineers, you don't just focus on the part. You focus on the solution. So we will find an alternative to that part — it avoids a lot of headaches later on.”

There's another aspect to catalogue distribution that many customers don't see: Not every part that is introduced is automatically in stock. Carrying an inventory of new parts is risky for the channel. These devices don't have customers yet, so it's difficult for a distributor to gauge how much stock to keep on the shelves. Mouser stocks every part it announces for sale. “Our charter is to launch a new product faster than any distributor,” Hess said. “In some cases, distributors don't support new product launches with inventory, technical documentation, or product support.”

The strategy is risky. “We are willing to take that risk because we feel we can find designs for that new product,” he said. “Engineers want to design in new technology, so we provide all the information available to help engineers select and design the perfect product.” Mouser also helps mitigate its inventory risk by finding unconventional applications for products. “It may not work for one application, but maybe it will work in another. We see it as our job to create excitement around a new product launch.”

In addition to relying on the documentation provided by suppliers, Mouser hires its own engineers to learn everything they can about a product. This information is aggregated and presented in a variety of ways.

The information is organized so that engineers can find anything they need with a quick glance. Then they can sit through applications development programs through voice over PowerPoint, or read information. If they want to dig deeper, they can get applications notes, spec sheets, buyers' guides, or whatever they need. All of this information is cross referenced by supplier name, part number, and performance specs.

Mouser has gone a step further by providing a BOM downloading tool and referrals to protoype houses to turn out samples of customer designs.

As distribution has moved up the design chain, so has engineering investment. This is an expensive proposition for organizations driven by sales. At the same time, the channel sees gathering and sorting data as a way to provide value for customers. “We want to be a source for product information, not just products,” Hess said.

3 comments on “The Constant Battle to Provide Value

  1. _hm
    November 5, 2012

    Is not constan battle way of life for modern engineer's? This is true for most disciplines. Distributiors on contarary, is not so demanding. Most silicon vendors and others design novel wonderful products. Deisgner eagerly grabs them before disriubutor understands it fully.

  2. Barbara Jorgensen
    November 6, 2012

    @hm: I agree that everything seems like a battle these days, in business and in general. I think to some extent everyone is striving to establish their value in the marketplace no matter where in the supply chain you reside.

  3. dalexander
    November 13, 2012

    @Barbara, In the last two years, I have seen incredible sophistification moves at the distribution level. The knowledge libraries are growing exponentially and the additional resources being offered are incredibly comprehensive. When a  distributor teams up with a resource like datasheets.com or Silicon Expert, they begin to approach everything a buyer needs to know in order to make a fully informed purchase. I think the last growth frontier, based upon current needs, would be an assignment of environmental and regulatory parametors for every part offered. It would be incredibly helpful to look up a part on Digikey and have a PDF listing that includes a material safety datasheet listing every chemical component by parts per million in the article or substance. This is now a manual one-by-one retrieval process that is costly and time consuming. If the buyer or a component engineer does not subscribe to a service like GreenSoft Tech or equivalent infromation provider, then the amount of work required to call each part's manufacturer and try to obtain that data is prodigious. As REACH and WEEE and other environmental issues are pressing themselves onto the US business scene, if I was a distributor, I would do whatever it takes to put the systems in place that would help every buyer retrieve the information with the greatest of ease as part of my standard services.

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