ELECTRONICA SUPPLEMENT ADVERTISEMENT FEATURE
Are we seeing the light in component distribution?
Anton Wurr, Director of Marketing, America II explores some of the global purchasing trends across the component distribution landscape in 2014 and how this is showing a positive outlook for the supply chain
E
lectronics distributors have to keep a close eye on the markets in which
they operate. After all, we buy and sell electronics and, as such, having an understanding of the most current purchasing trends is vital. At the end of the day there are few company-types better-suited to telling you what’s happening in the global electronics market than a good distributor, because they always have to keep their ears to the ground.
In the past five quarters up to January 2014 the distributor had primarily experienced customers trending 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.
GREEN SHOOTS As of roughly the beginning of this year the distributor has 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. 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
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Figure 1:
America II global distribution warehouse
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, the distributor is seeing
significant growth in the direct and authorised side to its business. Confident manufacturers are more inclined to sign new agreements, which have allowed America II to significantly broaden its offering. This, in turn, means the distributor has a more varied selection of direct lines that can attract new customers. America II has long been an advocate of what it calls its “Blended Distribution” model, and it’s thanks to this approach that the company is also seeing firsthand how global purchasing trends are impacting independent distributors. With demand starting to catch up with
supply, excess inventories are starting to dwindle, which is where the independent side to its business comes in to play. Excess inventory has not completely
dried up, but its ability to source from the open market and approved suppliers means it can reassure its customers that it will be able to support their needs - with its purchasing teams scouring the supply chain for the components they require.
A POSITIVE OUTLOOK All in all, it’s heartening to see so many positive trends taking hold of the electronics distribution market. Across the last year, the distributor has invested heavily in its US operation, in response to the improving environment. It has also hired a significant number of staff for its European office, and has 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?
America II
www.americaii.com 01462-707070
Enter 219 ELECTRONICS | OCTOBER 2014 S7
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