Distributors must widen horizons, says Arrow Europe president
Distributors broaden their business activities to target markets such as lighting, automotive, industrial automation and smart energy, writes Eric Schuck, president, Arrow EMEA Components
Specialisation, which has been at the foundation of manufacturing since the earliest days of the industrial revolution, has gained pace in recent times.
As markets become increasingly competitive, companies have focussed on what they see as their core competencies, investing in and developing these while outsourcing other, peripheral activities to organisations that view these as their core competencies. This process has gathered momentum in the last two decades.
It began with the supply chain; first, the employment of independent trucking companies extended to external warehousing and order management and now, today, the entire logistics of getting products from manufacturer to customer may be handled by a trusted partner.
But it is not just the stocking and delivery of finished products that reside outside a company. Those within the electronics industry are very familiar with the concept – and reality – of subcontracted manufacturing.
Contract equipment manufacturers (CEMs) make the bulk of the consumer goods that we all have in our homes, whatever the branding states.
In the semiconductor sector, the enormous investment required to develop fabs for leading edge processes means that many companies, including some of the leading players, entrust their chip manufacturing and, in some cases, process development, to expert third parties who have the volume throughput to justify the costs.
In this environment, where the expertise of organisations has tended to become deeper but narrower, some companies have taken the opportunity to expand their range of core competencies.
These companies, including distributors, have extended their capabilities through internal development and selective acquisition to offer new services and support that has never existed previously.
Where traditional distribution was largely about the stocking and supply of components, now the availability of ancillary services is of increasing importance to customers.
From design and production through, increasingly, end of life and value recovery services, distributors form the lifeblood of the global electronics industry.
Distributors now address high growth markets with specialised support and even their own product technology.
In Europe, for example, sectors such as lighting, automotive, industrial automation and smart energy are all seen as growth opportunities by electronic component suppliers.