ECIA introduces its latest research on the value of authorized distribution and independent manufacturers’ representatives, including five key takeaways.
ECIA has published an updated study, The Value Delivered by Authorized Channel Partners for Electronic Components, which delivers a model and value analysis of authorized distribution and independent manufacturers’ representatives for electronics component manufacturers.
The original analysis, performed over 20 years ago, focused on proving the value of the services electronic component distributors provide. There have been significant changes in the industry since the publication of the original study. ECIA members and staff worked with a team of professors and graduate students from Texas A&M University’s Global Supply Chain Laboratory to conduct research and publish the new report.
TDK-Lambda Americas’ executive VP sales and marketing and Chair of ECIA’s Manufacturer Council, Tom Wichert, explained the significance of the new study: “ECIA has refreshed a 20-year- old Texas A&M study that focused on the value of the services electronic component distributors provide. The new study, developed through a process of surveys and interviews with supply chain participants, does an excellent job of considering items such as product volume, distributor type (broadline, specialized, high service) as well as leveraging new benefits such as value-add services and the digitization of the sales process.”
ECIA chief analyst, Dale Ford, added: “This new study shows how authorized distributors and manufacturer representatives deliver value through a customer centric approach, demand creation and strategies for generating, managing and sustaining growth. The nature and value of the manufacturer/distributor relationship continues to grow. Multiple customer case studies conducted in this new research that revolve around existing customers, new customers and EMS/ODM customers reveal the diverse range of value and solutions delivered by authorized distributors and manufacturer representatives.”
The following are five key takeaways. Distributors play a vital role in the supply chain by bridging the gap between manufacturers and customers. They provide various values such as product and services expertise, inventory management, cost savings through bulk buying power, logistics support, market and business intelligence, sales support, technical support and training, marketing support, risk management and innovation.
Independent manufacturers’ representatives offer expertise, market knowledge, sales support, customer service, relationship building, cost-effectiveness, regional expertise, technical support and brand representation to manufacturers and customers. The authorized channel partnership model generally outperforms the direct selling model in terms of cost efficiency for all but the largest, most predictable customers.
It allows manufacturers to focus on core competencies, achieve economies of scale and lower unit costs, resulting in increased profit margins.
The specific dynamics of each scenario and the type of channel partner play a significant role in determining the degree of cost savings achieved through the authorized channel partnership model. Factors such as product volume, distributor type (broadline, specialized, high service) and traditional vs optimized processes impact the cost-effectiveness of the model.
Accurate data, market research and collaboration between manufacturers and authorized channel partners are crucial for maximizing the benefits of theauthorized channel partnership model. Reliable data ensures that cost analysis reflects real- world scenarios and industry trends, while collaboration minimizes channel conflict and optimizes operations.