DISTRIBUTION Scaling distribution when
the market speeds up Chris Swenson, vice president, warehousing and distribution, DigiKey
T
he electronics industry is in a strong upcycle, and distribution is feeling the pressure. Demand is surging, product velocity is shifting and lead times stretch or compress with little warning. In this upcycle environment, the question isn’t how to grow, it’s how to scale. Systems and processes that perform well during steady demand are tested quickly when volumes spike, and the real challenge is building operations that can absorb today’s growth while remaining resilient into the future.
On the procurement side, growth means maintaining sufficient inventory so the right products are available when customers need them. On the fulfillment side, it raises deeper questions about flow, labour, automation and consistency.
strengthening the basics: understanding where flow breaks down, stabilising processes, standardising work and then building on that foundation.
Standardise before optimising Improvement cannot happen in an unstable process. That belief has driven DigiKey’s investment in standardisation, operational controls and real-time visibility. Leaders need to see what’s happening on the floor, and teams need the tools to identify and address problems at the source.
A key enabler has been the development of engineered labour standards and more disciplined production planning. With support from a third-party planner, DigiKey has defined a roadmap toward a true production planning system. A new labour management system provides simplified, actionable views that allow leaders to understand performance against goals and where intervention is needed. Together, these approaches create a more predictable way to plan and execute work, replacing guesswork with clarity and improving accountability across the operation.
Predictable flow beats daily chaos In fulfillment operations, volatility is the enemy of efficiency. Peaks and valleys can feel like a constant game of reaction unless processes are designed for flow. To achieve this, DigiKey has taken a return to Lean fundamentals, a management approach focused on eliminating waste and improving flow, by creating a consistent, predictable process from order drop to order ship. Predictable flow impacts everything. When work moves through the operation consistently, staffing becomes more efficient and easier to manage. Automation plays an important role, not as a cure-all, but as a buffer against volatility. With the right systems in place, teams can focus more on maintaining a steady cadence rather than reacting to chaos.
Continuous improvement isn’t only about large transformation projects. It’s often about
32 JUNE 2026 | ELECTRONICS FOR ENGINEERS
Inventory accuracy at scale As demand grows and product assortments expand, inventory accuracy becomes even more critical to customer experiences. DigiKey’s product distribution center (PDC) is fully automated, with products stored in configurable trays that support a wide range of manufacturer packing types. The largest component is the Order Storage and Retrieval (OSR) system, which delivers parts directly to pickers, eliminating walk time and improving ergonomics. The PDC’s level of automation increases efficiency by 35 per cent while also improving packaging quality.
Competing globally from anywhere Operating from northern Minnesota doesn’t reduce DigiKey’s obligation to compete globally. Strong partnerships with carriers like FedEx and UPS are essential to meeting aggressive delivery expectations, including a 48-hour-or-less goal in many cases, while also maintaining service and managing cost.
Internationally, tariff complexity has increased significantly, making mitigation strategies more important than ever. Foreign trade zones (FTZs), bonded shipping, bonded warehouses and duty drawback programs all play a role. About one-third of DigiKey’s core suppliers ship into the FTZ, enabling tariff deferral. The next opportunity lies in deeper supplier collaboration to manage these challenges together.
Scaling for what comes next Looking ahead, scalability remains the biggest opportunity in fulfillment operations. In a labour-constrained market, efficiency matters more than headcount growth. Maximising existing automation, adding technology where it delivers clear value and relentlessly eliminating waste are essential to meeting demand in a way the community and workforce can sustain.
The approach is straightforward but not simple: don’t boil the ocean. Solve one problem at a time, starting with the biggest constraint, and build on stable processes. Paired with visibility, disciplined leadership and strong partnerships, that mindset positions DigiKey to deliver for customers, no matter how fast the market moves.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50
