Dean Hassell, General Manager of Arrow UK, talks to Electronics Weekly about inventory replenishment, the most active end markets in the UK and Europe, and the biggest challenge of 2010...
1. Have you seen evidence of increasing demand rather than inventory replenishment in the supply chain?
At this time it seems that replenishment of inventory amounts to approximately 50 percent and the rest consists of both finished goods stocked by the end customers to prepare for increasing demands as well as actual increasing demand. We anticipate that the strong order book we have seen recently will be followed by a slight flattening of demand in the coming months.
The good news for Arrow's customers is that we anticipated the order replenishment cycle early and aligned our forecasts accordingly back in the third quarter of 2009. In-depth engagement with both customers and suppliers has given us the flexibility to address the current market situation with the minimum of delivery bottlenecks.
2. Which are the most active end markets in UK/Europe at present?
We are seeing significant growth in the lighting and illumination markets as new components and systems for high-efficiency solid state solutions drive the replacement of traditional designs in the home, the workplace and a wide variety of indoor and outdoor lighting applications. This trend is set to continue as a result of both commercial considerations, environmental concerns and the need to address rigorous legislative requirements.
The same drivers are also behind increases in sales of systems and components related to alternative and renewable energy sources.
In the UK the medical market continues to offer good opportunities as microelectronics becomes an ever-more important element of equipment and products for diagnostics, treatment and well-being.
Finally, in Europe, we are also seeing positive signs in more traditional areas such as automotive.
3. Has the last 18 months changed the way you run the business or your approach to the market in any way?
Our new European 'Go to Market' model - including the milestones of our brand transitions in Central Europe and Italy - gives our customers access to more streamlined services and the full breadth of our portfolio - all via a single Arrow point of contact. Harnessing the collective commercial expertise, asset management and engineering skills of our existing operations under the Arrow brand has enabled us to further enhance our market offering.
While the business has been changing, this has not been as a reaction to the prevailing climate, but the implementation of a longer term strategy to further improve our service to customers across Europe. Indeed, if anything, this strategy has helped us to weather the conditions of the last 18 months better than many competitors.
At the same time we have continued to develop marketing and technical support that is differentiated by technology and selected end market vertical sectors (such as lighting and automotive) and application level. For example, we launched the TestDrive programme, which gives engineers free access to development tools for evaluation and this year we have rolled out our successful Embedded Platform Concept to Northern Europe, giving customers in the UK access to dozens of practical solutions to their application challenges.
4. What is the biggest challenge of 2010?
Visibility of customers' end market - or lack of it - remains one of the key challenges for the distribution channel. At the same time we can see that some suppliers face challenges in ramping up capacity to support short term replenishment requirements. This makes effective collaboration and forecasting from every organisation in the supply chain more important than ever.
5. Are you concerned about the future of the UK manufacturing community?
There is no doubt that the last 18 months have had an impact on UK manufacturing and that the nature of the manufacturing environment continues to change. The key is to understand that change and to evolve the distribution model accordingly.
The good news is that the UK has lots of innovative, design-led small-to-medium sized enterprises with core skills that cannot easily be outsourced to the lower cost areas of the world. By providing these organizations with the technology, engineering and commercial support they need to successfully bring their products to market, the distribution channel can play a key role in helping these organizations to grow and to contribute to the success of UK industry as a whole.
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