Feature
Lindsley Ruth, executive vice president of Future Electronics in
Montréal, said Future has grown its capabilities as well as its business with large OEMs.
He saidmore OEMs are looking to distributors for design help
asmany OEMs are running lean andmay not have asmuch engineering expertise in house as they did in the past.
In addition, Ruth said purchasing organizations at some large
electronics companies have becomemore centralized. They are relying on distribution to support, not just one site but all of the companies’ sites globally.
“They want to see the same level of service and responsiveness
across all the sites within their organization," he said. Some distributors have always had robust business with larger
OEMs and EMS providers and have not seen an increase in business frombig electronicsmanufacturers.
“As a percentage of our business it's about the same as it was
three years ago,” said Ed Smith, president Avnet Electronics Marketing Americas. “There are large industrial companies that buy fromus. Large telecoms buy fromus opportunistically," he said.
While business levelsmay be the same, large customers are
askingmore fromdistributors, said Smith. “The global OEMs and the global EMS providers are asking us
to tie supply chain and logistics together. Not only with the moving of parts but also data so that they can design and build anywhere,” said Smith. He said an OEMmay design a product in Europe but then build products in Asia and expect Avnet to support those efforts in both design andmanufacture.
He said Avnet has had to create internal capabilities to
support the designmanufacturing of equipment anywhere in the world for customers.
How special While large OEMs and EMS providers often buy frombig distributors, some also purchase parts fromsmall specialized distributors. For example, Astrex, based in Plainview, N.Y., does business with some of the largest defense and aerospace companies, including Lockheed, BAE Systems and Northrop Grumman among others. Astrex had sales about $36.6million last year, according to Electronics Sourcing North America’s top 50 distributor listing. Astrex sells high reliability specialized connectors, which often
require valueadded work for specific events or aerospace applications. However, the volumes are low.
“In the high reliability connector world, the volumes aremuch
lower than some commercial and industrial applications," said MichaelMcGuire, president of Astrex. "The breath of the product is just enormous."
He said
subcontractors for themilitary, "always like to have their own connectors for everything, so there is such a widemix which is probably best served by companies our size,” saidMcGuire.
In addition the
specialized products also require some modification or some valueadded work. Large defense and aerospace contractors will buy fromAstrex and other small distributors because they have the parts in stock and will do the necessary valueadded work in a relatively short period of time.
“It's never to the advantage of theOEMto buy small quantities fromconnector manufacturers,” saidMikeMcGuire, president of Astrex.
“We stock the connectors and do the valueadded in two days
instead of 16 weeks,” he said. The pricing is generally the same or less (than a componentmanufacturer) because we are buying most components thousand pieces at a time instead of buying one piece fromthe connectormanufacturer.”
Astrex also has some solesource products which is another
reason that some large aerospace companies do business with the small niche distributor.
“It's never to the advantage of the OEMto buy small quantities
fromconnectormanufacturers,” saidMcGuire. Large OEMand EMS providers will likely increase their
business with distributors, providing distributors can further enhance their value by improving services and beingmore of a partner to large customers rather than just a supplier.
“The best distribution partners are the ones that are an
extension ofmy organization,” said Linton of Flextronics. “They becomemy extended procurement armormy extended supply chain arm.”
www.flextronics.com www.ibm.com www.celestica.com www.ttiinc.com www.futureelectronics.com www.avnet.com www.astrex.net
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