Farnell targets production orders in strategy shift
Premier Farnell is going after small order production business as part of a major change to its distribution business, which is also seeing it become a design and manufacturing company.
The latest move, the planned acquisition of US-based design services company Avid Technologies for $13m continues a strategy which started two years ago with the purchase of China-based development board design and manufacturing firm Embest Technology.
“The Embest business has been so successful in last 12 months we found we were running out of design capacity,” Premier Farnell CEO Laurence Bain told Electronics Weekly.
“Avid satisfies this requirement and also brings new wireless and analogue design capabilities,” said Bain.
The creation of a development board design and manufacturing business is part of a larger change of business strategy which will result in Premier Farnell competing for small order production business for the first time.
“We can now follow the design cycle from the sale of a development kit through to prototyping and initial production,” said Bain.
“We will support small order business where it makes sense. Our previous strategy did not support this, now we can,” said Bain.
“If we need to work on supplier leadtimes, we will,” said Bain.
To support the production business the distributor has been steadily increasing inventory. Around £20m worth of new inventory was added in the first six months of last year.
Bain believes the role of the online and catalogue component distributor is changing.
“To the traditional distribution model we have added a new business model where we are turning suppliers into customers,” said Bain.
“As part of this we are working with suppliers 12 to 18 months before technology comes to market. This is invaluable to our distribution business,” said Bain.
Bain expects the distributor’s design and manufacturing activities to be a £50m business within three years. Part of this is the CadSoft PCB design software business it acquired five years ago.
He expects the development board manufacturing business supporting Premier Farnell’s main distribution business. “It gives us the opportunity to see potential new business before our rivals. We can align our product offerings ahead of new technologies coming to market,” said Bain.
Bain also says the company’s success with the Raspberry Pi, low cost embedded computer, is creating new distribution sales.
“I see each business complementing the other, and this will help us to grow market share in the high service distribution sector,” said Bain.