Interview
impact of technology in the short term but underestimate the impact of technology over 10 years. We have gone from 5% of our business being online to 80% in a very short space of time. We are the industry leader in this area. It has provided our international reach. It has to go beyond just a sales tool and provide all the data behind each product and enable the site to be customized to a customer’s areas of interest.
The Digi-Key software, and in particular the ability to easily price up a BOM list, is one of your best-known features. What strategies do you use to make sure the customer then turns that into a buy deci- sion and doesn’t simply use your site for comparison shopping?
There are a couple of answers. First, we have to be price competitive. Then we have to compare how we’ve serviced that customer over the last five, 10 or 50 orders. Did we meet the level of customer service that was expected?
How is the current shortage of raw mate- rials and metals affecting your ability to maintain consistent supplies of compo- nents to your customers?
In some product categories, it has been incredibly challenging. In the normal course of events we would be running around 95% of inventory availability. This last year we were running around 89-90% in stock, which indicates we were having trouble with around 5% of stock allocation from some manufacturers. In many cases there were alternatives, but we are seeing an improvement in this situation over the next quarter or two.
Have you experienced any favoritism in the supply chain? Some industry sources say the top six CEMs in China are not experiencing these same difficulties.
In some cases we actually got in a favored position because Digi-Key is seen as a demand creation tool, and many engineers are looking for products for new designs. These designs may be a handful of components now, but the potential for large volume orders is considerable.
Almost 22% compound growth over the past twenty years is a remarkable achieve- ment, but to do this organically, without an acquisition strategy, is even more remarkable. How sustainable is this, and do you see an acquisition strategy featur- ing in the next stage of your company’s
www.globalsmt.net development?
I really don’t see acquisitions playing in within the next five years. I think the growth we have at the moment is sustainable, although we are always subject to the market. Having said that, Digi-Key has always outperformed the market. For example, if the market is up 10%, Digi-Key will be up 25%. In Europe passives are 50%. Our passives are up 100%. We are still at
Lesson 1 :
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MaX Board Size: 558.8mm (22.0”) x 609.59mm (24.0”) 4000C = Traditional Dependability + New Technology
®
$28,750.00
the bottom end of the growth curve in Europe. I think we could grow two to three times in Europe and something similar in Asia. Most of our European growth has been on the engineering side. We really have not event started in serving customers for NPI and high-mix, where our real strength lies. The fun has just begun!
As you seek to improve your service and your reach beyond the United States, do you envisage opening regional distribu- tion centers?
If you would have asked that question five years ago, I would have said we would have had a regional distribution center in europe by now. My thinking has changed 180 degrees. The Digi-Key model is shipped from a single point. We can go anywhere in the world in one to two days. At a worst case it would take three days for deepest China. We are not in the maintenance and
repair business. We are in the design, NPI, production environment, and the importance to designers is the greatest breadth of component inventory and that it will be delivered on time. When they source a single product and mine down to it, they will see the same component from up to six different vendors.
Global SMT & Packaging – Celebrating 10 Years – December 2010 – 51 For more info visit:
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2010 has been a busy and challenging year. What is next for Digikey?
This is not going to sound like an exciting answer to your question. I think we will be doing much the same as we are doing now, but more of it. We are like a snowball rolling down a hill. Twenty years ago we were a $100
million company, Last year, we were a $900 million company. This year we will be over $1.5 billion with growth in Asia of over 150%.
Mark, thank you very much for spending time with us today.
Trevor Galbraith.
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