Distribution world – New boy on the block

Distribution world – New boy on the blockThe new man in charge of Arrow Electronics UK, Alistair Oag is an accountant by training with experience of the transportation sector. But can he bring new ideas to the distribution industry? By Richard Wilson
Alistair Oag has no electronic engineering background, but this he sees as no disadvantage in his new role as UK managing director of Arrow Electronics.
Indeed Oag, an accountant by training with a CV that includes a period spent working in the transportation sector, could be just the guy to bring some fresh ideas to the UK electronic distribution sector.
He certainly does not speak like an engineer. “I like to draw an analogy with the venture capital community,” says Oag. “I look at the electronics market and consider the return on investment which we can achieve and where. All sectors and technologies cannot be rising stars. So you must make the investment and measure the performance.”
Oag is not surprised by the cyclical nature of the semiconductor market. He has seen similar cycles in other sectors, however he does believe that in one respect the electronics sector does present an unpredictable feature which must be tackled. “Supply and demand imbalances are features of any industry, but the situation is exaggerated in electronics. The wild card is the technology,” says Oag, who is visibly animated by the challenge of predicting technology trends for a distributor like Arrow. “That wild card is the fascinating thing and it drew me to the industry,” he adds with a smile.
“One thing is certain,” he continues, “technology and products will be 20 per cent different next year and you have to address that.”
Oag’s previous job at Arrow was finance director for the northern Europe business. He does not carry with him the baggage and preconceptions of a traditional distribution boss; a salesman who has worked his way up through the usual business channels.
Some traditionalists in the distribution industry may view Oag’s lack of “on the road” experience of the business as a disadvantage. However, he seems to be the man to bring new ideas to the established and some might say tired distribution formula.
One gets the idea that the big wigs at Arrow sense a change in how the distribution business is developing and Oag, with his financial background and experience of the service sector, is the man they have chosen to drive the UK business forward.
Even Oag’s language is different. He is quick to cut through all the technology and buzz-words, and emphasise what a distributor with the financial and organisational resources of Arrow should be good at. “Everyone is looking at ways of transferring cost, suppliers and customers alike,” says Oag. “We must understand the model of cost transfer. We can do that function more cost effectively than customer or supplier.”
What Oag has inherited is a new organisation. More importantly he has been presented with the challenge of changing the market’s view of Arrow.
No longer just the UK arm of the world’s largest broadline franchised distributor. But a more flexible organisation that chameleon-like can appear as different organisations to different types of customer.
“The customer will only pay so much, so we have to design a model to deliver that efficiency,” says Oag, who sees little difference in the basic principles behind any other service and logistics industry. “Why should electronics be any different from any other industry?” he asks.
Last year’s re-organisation rearranged the company into five new business units, addressing all customers from the largest contract manufacturer, with global sourcing requirements, to the specialist developer looking for small quantities of a particular product tomorrow. But does Oag think it can work?
Yes, but he is realistic enough to accept there will be challenges, like in any large organisation, making the new business structure operate efficiently for customer, supplier and distributor.
“From the customer’s point of view smaller manufacturers will see us as a technical specialist,” says Oag, who then points out that another part of the same organisation must be able to operate on a wholly different scale. “A large manufacturer may operate in Finland this month and Ireland next month so we have to turn ourselves around to support that,” adds Oag. “It’s like spinning on a sixpence.”
So change seems to be in the air. “We may need to refine the model, but we are convinced that the core is there,” says Oag, who is prepared to admit: “There will be challenges making it work.” And if there must be further changes? “It is not set in concrete,” he adds pragmatically.
Oag will bring some fresh ideas about service and cost of ownership to the distribution business. And now is the time for fresh ideas as the distribution sector emerges battle-scared from the last two years of freefall in commodity semiconductor prices. “It is a maturing industry,” says Oag. “You cannot keep re-inventing yourself, you have to know what yourself is.” Maybe it will take an accountant to answer that question for Arrow.

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