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Distribution Roundtable

Lynn Ma

Alan Patterson Wither distribution in 2012?

CIE talks to Premier Farnell and to Microchip about the key trends they are seeing, and those they expect to see over the coming months and years, in the global distribution industry

CIE: How quickly is the global distribution market growing and where are the most active end markets?

Lynn Ma (LM): Asia stands out as a region for huge potential growth. There are very significant numbers of young people studying electronic engineering in the region and major building and transportation projects planned in Asia will create demand for new electronic equipment designs and components. One particularly strong area could be solid state lighting as new infrastructure projects seek to be energy efficient by adopting the latest lighting technology. We are also seeing a lot of contract manufacturing activity in Eastern European countries and increasing amounts of design and prototyping too.

Alan Patterson (AP): The greatest ‘noise’ generated by sector appears to be in lighting, alternative energy, energy reduction/harvesting, medical, wireless and sensors, Instrumentation and robotics also remain important and innovative high technology markets for us.

Mike Buffham (MB): The strong inherent design expertise and capability in the established European ‘powerhouses’ will help business remain across Europe. Solid state lighting has brought a whole new set of customers to Farnell, while alternative energy looks set to continue to grow as a

10 July/August 2011

major market sector for electronics components suppliers.

Mike McGlade (MM): In terms of product shipped, the Far East is the largest market for Microchip. Of course, much of the end product that our devices go into in that region is ultimately destined for customers in Europe and North America. We have seen significant activity and growth in the areas of the consumer market that we target, as well as strong performance in other sectors including automotive and medical plus niche areas such as home metering.

CIE: How has the last 12 months changed the way that you approach the market (with respect to product availability and demand)?

LM: Farnell has worked hard on optimising its ‘one-stop’ multi-channel business model. Through the element14 e- community we can engage with engineers at the earliest stage of their new product designs and by taking an application based approach we demonstrate and utilise our in-house technical expertise which is shared with customers.

Good inventory management remains a

cornerstone of providing a reliable service. If you are to be a designer’s ‘one-stop’ location for product and design support, you must instil confidence that you will always be able to meet the demand for parts on short lead-times.

Components in Electronics

Mike Buffham

AP:We have accelerated our decision making processes to maintain our strong service proposition, not only across Europe but globally. Returning global demand, plus dealing with the effects of natural crisis such as the Japan earthquake, has tested this agility. Greater collaboration across our supplier partners has provided an enhanced level of market intelligence and enabled our business to anticipate and plan appropriate responses to situations and demand changes.

MB: The last 12 months has underlined the importance for distributors to have good processes and communications with both customers and suppliers. Strong processes and inventory management enable us to maintain continuity of supply through high demand periods, - even when some device manufacturers are forced to put components on allocation.

MM: The last year or so has provided a test for both component manufacturers and distributors alike. We have continued to place high importance on careful management of stock and good processes; this has ensured that Microchip has not put any customers on allocation during the recent periods of unprecedented high demand in the electronics components sector and that lead times have remained acceptable.

CIE: What do you see as the key new services that distributors are/should be offering?

LM: Technology and tools associated with the Internet create good opportunities for distributors to provide exciting and valuable new services for their customers. For example, webinars that focus on particular technology or application sectors can provide useful knowledge for designers and generally foster information sharing.

AP:Within the high service distribution area a focus on evolving and enhancing service beyond a product offering should be and is a core element of our proposition. By creating a platform for providing design engineers solutions based information throughout the design cycle we can add real value to the design experience.

A good example of a new initiative is the recently launched ‘the Knode’ which

Mike McGlade

has been cited as the Google for design engineers, assisting them to search for information through a logical platform. Increasingly looking to create

‘communities’ within ‘a community’ is the next evolutionary step of community, creating a space for more specialised collaboration. This level of structure allows a greater number of customers to become involved with community from all levels and functions within the design process.

MB: The phrase ‘beyond product’ encapsulates what we believe needs to be offered and reflects what we feel the design engineering community is looking for in a distributor. It is crucial to offer not only the broadest choice of readily available product supported by data, but also design support and collaboration, software, development tools and more.

CIE: How radically has the internet changed the way you conduct your business? Will business be 100% online one day?

LM: The Internet has completely changed the way we gather information, communicate and source product. Acceptance and use of the web in engineering has been faster and more extensive in some regions than others – this is especially true in some parts of Asia, where a more advanced Internet infrastructure coupled with a generally younger engineering population has speeded adoption.

AP: The Internet has lead to remarkable changes in how we do business and interact with our customers. The web represents the foundation of our multi- channel approach that offers multi- language websites, local technical support, global call centres and field support is key. The catalogue and direct mail will remain important during 2012 with emphasis being placed on vertical market segments such as wireless, solar and lighting – short form catalogues will support our activities in these areas.

MB: Realising that that there are different working cultures in various regions and countries is crucial. For example, due to customer demand, we have recently re- introduced paper catalogues in Sweden. Face-to-face and phone contact are still highly valued by customers across Europe.

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