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Phil Stubbington
Service Delivery Head - Global Freight Management
Exel
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Home  Wholesale Distribution Electronic Components
Electronic Components
Rapidly changing technology and an increasing rate of component obsolescence have significantly changed the role of an Electronic components distributor. A comprehensive line card should be ably supported by a host of design, engineering, fulfillment and materials management services to enable a component distributor to truly partner with OEMs, manufacturers and resellers in creating an agile supply chain that will respond to shorter product life cycles and faster new product introductions. Many distributors are leveraging their unique position to connect the technology innovations of suppliers with the design and manufacturing needs of customers and are offering a portfolio of design, demand generation and supply chain services.
A typical electronics components distributor still derives most of his revenue from component sales and one of the key business imperatives is to maintain minimum levels of on hand inventory, increase inventory turns and leverage historical data and market intelligence to make accurate sales forecasts. In addition to this electronic distributors should also cope with the following issues:
Multi national presence
A larger footprint across geographies is now emerging as a strategic growth driver for electronic component distributors. This can primarily be attributed to the electronic product development and realization cycles that are increasingly spanning across geographies. For example North America and Europe continue to be the design capitals while Taiwan, Mexico, Korea have emerged as the preferred EMS or contract manufacturing locations. Since a distributor provides design chain services for the OEM, materials planning and supply chain services for multiple contract manufacturers it is necessary to have a global presence in tune with the product realization strategy. Moreover several distributors are augmenting their presence in the Asia /Pacific region which is the fastest growing electronic components market. It is important that a distributor has the right technology and resources to manage this multi location growth.
Inventory Obsolescence
One of the key competitive factors for any electronic components distributor is to maintain sufficient level of inventory to meet rapid delivery requirements of customers. At the same time the distributor should also address the risks associated with product obsolescence and valuation of inventory at hand. This requires good contract management skills to truly leverage the price protections and return privileges upon cancellation. More over component distributors should also keep track of components that have short product life cycles or sourced off shore with long lead times as they have the greatest risk of lost market revenues and obsolescence write offs.
Mergers and Acquisitions
M & A activity in this space is guided by a distributor’s objective to broaden his product portfolio or gain access to new capabilities like design chain services or engineering consulting services. Distributors should manage this in organic growth by aligning business processes and disparate IT systems to truly leverage organizational synergies.
Commitment to Fresh Data
A typical distributor maintains millions of parts and keeps adding new products and attributes on a daily basis. It is important that distributors have access to consistent data and some distributors have already started leveraging their consistent product data to offer value added services like component information services. |
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