Market Review Continued from page 14
with thousands of lines to invest in demand creation on each one – especially if the pressure of competition is removed by disengaging from local distributors with close customer relationships. Customers hate being restricted in this way and if there is insufficient choice of franchised suppliers available to them, they will go out onto the grey market in search of the best pricing, the best delivery terms and the best service. “Despite the M&A there is still
overcapacity in the market and we are seeing lower pricing. Customers are taking advantage as you would expect, and reducing their inventory and placing short term orders. Often this is because they too can only see relatively short term demand. There are bright spots – the LED market and with IoT growth is sustaining M2M.” However, Steve feels that customer
relationships are still the only thing that will keep businesses going. “It is the distributors who maintain lean organisations and out-think the market who will survive and thrive. You need to create demand, by understanding not only your customer but also your customers’ customer, and innovating to serve both better. The M&A activity that we are seeing is a game-changer. Whilst it can create larger and more efficient organisations, they won’t succeed if they lose sight of the fact that people buy from people and it is relationships that drive business.”
price and right time. At Arrow, we are working to ingrain “digital thinking” throughout our organisation. When I joined the company in 2014 as Arrow’s first Chief Digital Officer, I was tasked with driving the company’s digital transformation and identifying new ways to create increased digital value for Arrow’s customers and suppliers. “Part of Arrow’s digital transformation involves evolving beyond the role of electronic parts distributor to become an end-to-end solutions partner for companies that design electronic products or buy enterprise computing solutions. By intensifying our digital focus, we are also empowering employees to find new and innovative ways of interacting with our customers. Aiming to achieve our goals as quickly as possible, we recently acquired several companies dedicated to helping engineers in their everyday work by providing prototype-design and other hands-on services. Arrow also acquired Silicon Expert, giving our customers access to one of the industry’s most comprehensive information hubs for electronic parts. “Arrow’s digital transformation is
creating a powerful e-commerce engine at the heart of our organisation. But e- commerce is only one part of our bigger picture—the next phase of Arrow’s digital transformation involves virtualising our human resources to enable staff to collaborate and co-create with customers online in real-time. “We made great progress in 2015. While we still have a lot of work to do,
the latest technology as soon as it is available from the manufacturer so that design engineers have access to the latest technology to differentiate their latest designs. We are the NPI (New Product Introduction) Distributor. We address all sectors – IoT, automotive, industrial automation, medical, defence, lighting, audio, wearables, T&M and the makers – hobbyist community,” said Graham Maggs, director marketing, EMEA, Mouser Electronics. “Because of this our experience of the market is not
necessarily in line with other distributors. This year we have seen consistent double-digit growth in all European countries, significantly ahead of the industry norm, and our
Steve Rawlins
However, some companies are using other tactics to drive more customers to their business. Matt Anderson, chief digital officer, Arrow Electronics says that they are embracing digital change and explains why it has tangible benefits. “Almost every aspect of life and work can now be done digitally—from production lines and creative tasks to the way we consume news and interact with friends and family. Increasingly, solutions providers must think digitally to satisfy customers’ needs and deliver innovative products to the right person, at the right
www.cieonline.co.uk
we are already seeing the results of our digital transformation in the form of increased sales through Internet channels, while our Internet-based audience and traffic to the website have more than doubled.” The company are hoping their digital transformation will continue through 2016.
One company who claim to have experienced consistent growth in the past year explains what they are doing differently to the rest of the industry. “Mouser is unlike many other electronics distributors in that we focus on delivering
competitors. That is on the back of continuous growth since we established our European operations - in 2014 we posted European revenue growth figures of 45 per cent with the number of lines shipped increasing by 40 per cent and the customer base by 28 per cent. “Backing up our claim to be the NPI distributor, in the last 12 months alone we have added over 2,200 NPIs and we remain committed to even more right across our supplier portfolio. We work with our manufacturing partners to identify and promote their latest products and technologies. Much of this is driven through our website, which is not only an eCommerce site but also a vast information resource containing detailed design ideas and information, but we also maintain local branch offices so that people can talk to someone who can help in their own language, transacting business in their own currency according to the local business culture. Looking ahead to 2016, Mouser are getting ready for physical changes that they hope will facilitate their continued growth. “The biggest event for Mouser this year is the expansion of our state-of- the-art central headquarters and warehouse. Lest that sound less-than- exciting, let me explain: to a stocking distributor such as ourselves, inventory is our greatest asset. Currently we are close to capacity, but by the end of this year we will have expanded our facilities by around 35 per cent. This will enable us to stock an even wider range of products; it will lead to efficiencies and greater accuracy of order delivery; and it will enable further expansion of our value- add services.”
Matt Anderson
distributor of power products, in August 2015 augments the group’s existing power capabilities and presents a much stronger combined proposition to our global OEM customers.”
Chris Haworth explains what Farnell element14 are planning to do in 2016. “For us, next year is about focusing our attention on continuing to provide an excellent service and adding value in the ways that will make a real difference, whether that’s in delivering a product the next day or providing essential supporting information that speeds up the design process. Investment in key products and New Product Introductions is also an important part of our strategy, as well as growing our supplier network and helping partners evolve their services in line with industry trends, such as the Internet of Things (IoT).
He continued, “Early in the year we successfully opened three Regional Design Centres (RDCs) at carefully selected locations in the UK and Asia to attract the right talent and to be close to key eco- system partners and customers. We see our RDCs as being key to driving innovation and technological developments in product efficiency, user experience, connectivity and miniaturisation across our Technology Products division. Our commitment to R&D will continue into 2016, driven by
Components in Electronics
“Looking at the industry it is worth paying attention to how distributors differentiate their real-time product information and data offerings. After- sales support, particularly the provision of online communities and knowledge bases, is also increasingly expected by customers, therefore expect distributors to bolster their offering in this area. For us, this means ensuring we are offering support to our customers at every stage in the design process. Whether that’s technical support at the design stage, reducing time-to-market through customisation initiatives like Custom Pi, or continuing to build on the ways in which our 370,000 strong community of engineers is able to offer research support to customers throughout the design process.
“The year ahead seems to feature many of the same market conditions and trends as 2015. As a result, we’re predicting a renewed focus on the ‘core’ business offerings – such as availability and delivery – supported by value-add services that go the extra mile for customers and help reduce the time to market.”
December 2015/January 2016 17
our engineering thought leaders and the group’s technology board.” “We also continue to progress our strategy of making targeted, complementary acquisitions to strengthen our integrated technology offering. Stadium United Wireless, which we acquired in July 2014, has performed well this year and the acquisition of Stontronics, a leading manufacturer and
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