Vallee Boosted Distribution’s Investment Profile

Steve Jobs perhaps is one of the best examples of a personality that helped shape an industry. Whether you liked or disliked Jobs, agreed with him or not, the impact he and {complink 379|Apple Inc.} had on consumer electronics is undeniable.

There's a segment of the industry that is not as visible or dynamic as consumer electronics but services every link in the supply chain. Electronics distribution — referred to by Mad Money 's Jim Cramer as the superstore of electronics — has its own collection of people who changed the industry. One of them is Roy Vallee, who is leaving Avnet Inc. after more than three decades. (See: Avnet’s Vallee Passes the Torch.)

It's a testament to Vallee's leadership that Cramer has even heard of Avnet. Vallee — and now Avnet CEO Rick Hamada — was a frequent guest of Cramer's. I was covering electronics distribution before Vallee became president and CEO of what is now the largest electronics distributor in the world. It's fair to say that distribution had to fight for its position in the industry: For a long time it was viewed as a less desirable alternative to direct channels, and investors couldn't quite figure out what distribution did.

The term “professionalism” didn't come up a lot, and, quite frankly, there wasn't a lot of trust to be found among suppliers, distributors, and customers. Distributors were suspected of playing fast and loose with pricing, contracts, and ethics.

Vallee was one of the people who changed that. He insisted on transparency throughout the corporation. He adopted and implemented practices such as operational excellence and value-based management. Along with Arrow's former chairman and CEO, Steve Kaufman, Vallee began to raise the awareness of the channel on Wall Street and took pains to identify the value proposition of distribution to the investment community.

He also insisted on respect across the organization: for suppliers, for customers, for peers and competitors. Although Arrow and Avnet competed fiercely for the No. 1 spot on industry lists, the companies began to collaborate and cooperate to improve the reputation of the channel as a whole. (I wouldn't exactly call the companies “chummy,” but they certainly respect one another.)

There have been a lot of industry-wide accolades for Vallee's accomplishments — the biggest, perhaps, is shepherding Avnet from a roughly $2 billion organization to more than $25 billion today. Even though Vallee never sought the spotlight, he quietly and deliberately shaped the new Avnet. As an executive, he helped add “professionalism” back into the channel's lexicon. As a person — my colleague Bolaji Ojo uses the term “gentleman.” Anyone who has met Vallee knows how well the term fits.

When Vallee first began to step away from the daily rigors of running a $25 billion company, I asked him how he'd like his legacy to be viewed. “I'd like to think I elevated Avnet's game in my tenure as CEO,” he said. In short, he did.

3 comments on “Vallee Boosted Distribution’s Investment Profile

  1. mfbertozzi
    August 15, 2012

    @Barbara: very good article that reports, for a sector maybe not so much famous, incredible results achieved thanks to the vision and determinition of a self-made man. We don't forget about forty years ago he was stocking at a small distributor in Californa. I leave you a very good interview with this gentleman, it is very fascinating how he is able to explain stock market company's evolution.

  2. dalexander
    August 15, 2012

    @Barbara, I remember the wild west days of distributors. In chaos and disorganization, someone always can make a profit. The jockeying among distributors was like watching a horse race with no anticipated favorites. A few of my favorite fillies were Schweber, Wyle, and Hamilton before it became Hamilton Avnet. I should also mention I was smack dab in the middle of Silicon Valley where electronics companies  Fairchild, AMD, Intel, and National Semiconductor, all had buildings within a stone's throw of each other. In those days, pricing wasn't so much an issue as service. My favorite outside sales people came from Schweber and boy did I watch them from from distributor to distributor. It was a snatch and grab contest among distributors to snag the best people. I can definitely appreciate what Vallee did to help bring things from a full roiling, boiling rootin tootin shootout to a “Can't we all just get along” quasi-harmony among distributors. I guess with Vallee's assignment, there was a new sherrif in town. Was he involved in founding the EIA (Electronics Industry Association?)

  3. Barbara Jorgensen
    August 20, 2012

    Hi Douglas–oh, the tales I could tell! I try not to get too nostalgic on the “early days” of distribution, but suffice it to say I was one of a very few females in the industry in those days, although we (meaning women) made a lot of progress (go Harriet Green!). I had the privilege of spending a day with Seymour Schweber in his NY offices and he too was a true gentleman. A lot of great people came out of that organization. One of my other memories is of  Marshall Cox who had a grand piano as his desk.

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