Supply chain services, technology take centre stage as buyers keep pace with the strong economy
Buyers face a different set of challenges as the economy continues its upward climb, particularly when it comes to managing their supply chains. Strong demand across just about every end market has extended lead times for many electronic components and created pricing pressures as well as labor challenges—especially in the manufacturing sector, where employment is expanding and skilled workers are hard to find.
It all adds up to busy times for buyers at organizations of all sizes, who face both fundamental and technological challenges in mid-2018. Fundamentally, today’s challenges come down to constraint: Demand is high, and it’s placing distributors in a “chief expediter” mode, says Phil Gallagher, global president, electronic components, for Avnet.
“We’re doing what we can to feed the lines for our customers,” Gallagher says, pointing to the key challenges facing buyers in today’s marketplace. “Right now, [this is] one of the top [issues] that may not have been [an issue] two years ago because inventory and parts were plentiful.”
Traditional supply chain services such as forecasting and inventory management come into sharp focus in times like these, he adds, as customers concentrate on keeping production lines running smoothly and efficiently.
Still, as business challenges go, Gallagher says these are good ones to have.
“I see them as positive … because it means things are good,” he says, pointing to strength across Avnet’s end markets and regions. “Most of our customers are doing well … There are some exciting things going on. We’re seeing it in all regions.”
Technology challenges persist during the current good times, as well. Gallagher and others say there continues to be a growing need for electronics expertise among engineering and buying organizations large and small, particularly as customers seek to create increasingly sophisticated products or add Internet connectivity to non-traditional applications. Gallagher points to transportation, medical, and agricultural markets as just a few examples of areas where Avnet is seeing an increase in demand for technical service, from design all the way through to production. The distributor unveiled a suite of IoT services this year aimed at meeting such needs; they include advisory, design and build, cloud and digital, and lifecycle services.
Such capabilities are part of a larger transformation at Avnet over the last 18 months that has included the addition of engineering communities such as element14 (via its acquisition of Premier Farnell) and Hackster.io as well as manufacturing solutions provider Dragon Innovation.
Avnet’s transformation underscores a continuing evolution of the distribution sector, as distributors seek to move beyond providing products and services to offering customers complete solutions.
“[We tell customers], ‘We want to be your solution provider. If you have an issue, a challenge, call [us],’” Gallagher explains. “It’s really what we’re moving toward.”
Other headlines over the summer emphasize the trend as well. Interconnect, passive, and electromechanical specialty distributor TTI announced an expansion of its semiconductor specialty business, TTI Semiconductor Group (TSG), in July with its purchase of California-based distributor RFMW Ltd. The deal is expected to close this fall, and will add RFMW’s focus on radio frequency and microwave components, semiconductors and related engineering support to TTI’s lineup of specialty services. TTI launched TSG in 2017 with its purchase of Symmetry Electronics as a way to evolve its specialist model to include semiconductor products and services.
“RFMW will be an important addition to the TTI family of companies and our semiconductor distribution group,” said Michael Knight, senior vice president, TTI Business Development and TSG President. “The company culture, focus, and reputation for superior customer service and technical expertise complement TTI extremely well and are a perfect fit for our specialty distribution model.”