GLOBAL PURCHASING TRENDS IN 2014
Electronics distributors have to keep a close eye on the markets in which they operate. After all, we buy and sell electronics and, as such, it is vital to have an understanding of the most current purchasing trends. Here at America II Electronics, we have individuals dedicated to gaining a constant, holistic understanding of the market. There are few company‐types better suited to telling you what’s happening in the global electronics market than a good distributor, because we always have to keep our ears to the ground.
In the five quarters up to January 2014
we’d primarily seen customers tending towards purchasing in line with lead‐time, adapting quantities to demand. This was not a huge surprise. We’re only just coming out of the greatest economic slump in recent memory, after all. Business was steady, but customers lacked the confidence to schedule long‐term orders.
As of roughly the beginning of this year,
we’ve finally been seeing signs that market confidence has returned. Demand is finally starting to catch up with supply, causing the major component manufacturers to see their capacity become constrained for the first time in recent years. This is resulting in extended lead times, sales price increases and even whispers of allocation measures returning. This is not to suggest that the global
market is experiencing the impact of these trends in a uniform manner. We first noticed this trend emerging in the US, just less than twelve months ago, with it since spreading to Europe and the other regions.
22 July/August 2014
An America II worker prepares a consignment for shipment
The reasons behind this staggered
resurgence are far too complex and interlinked to detail at length here, but to put it simply, it can be traced back to consumer confidence. As consumer spending has increased, this has trickled down to the OEMs, encouraging them to schedule orders with longer lead times.
As for why the United States was the first
place to recover: it was the first region to enter the recession. Therefore, there is certain logic to it – and its consumers – being the first to see the effects of global recovery measures.
As a result, we’re seeing significant
growth in the direct and authorized side to our business. Confident manufacturers are more inclined to sign new agreements, which have allowed us to significantly broaden our offering. This, in turn, means we have a more varied selection of direct lines that can attract new customers.
We at America II have long been
advocates of what we call our ‘Blended Distribution’ model, and it’s thanks to this approach that we’re also seeing first hand how global purchasing trends are impacting independent distributors.
Anton Wurr, director of marketing, America II, summarizes some of the trends the company is seeing
America II is headquartered in St. Petersburg, Florida, with offices throughout Europe and the rest of the world
With demand starting to catch up with
supply, excess inventories are starting to dwindle, which is where the independent side to our business comes in to play. Excess inventory has not completely dried up, but our ability to source from the open market and approved suppliers means we can reassure our customers that we will be able to support their needs – with our purchasing teams scouring the supply chain for the components they require.
All in all, it’s heartening to see so many
positive trends taking hold of the electronics distribution market. Across the last year we have invested heavily in our US operation, in response to the improving environment. We have also hired a significant number of staff for our European office, and have invested in Asia and Mexico.
Across the globe, the picture is
brightening. When a business is confident enough in the market to start investing in its operation, is that not the strongest evidence that it is optimistic for the future of the global distribution market?
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