Newark element14 is one of the best-known and largest electronics distributors worldwide, and so we got in touch with Richard Halliday, the company's director of product management, to talk about new paradigms for distributors, and how manufacturers can better engage with their supply chain partners to get more value out of their relationships.
What challenges and opportunities for growth can distributors expect for 2014?
Richard Halliday: In an electronics market that has seen relatively flat performance over the last several years, there continue to be a number of areas where distributors can differentiate and find growth. One of the ongoing challenges within the market is the rapidity of demand swings, increasing frequency of orders and diminishing average order sizes, which place an increasingly transactional burden on distributors. Customers’ expectations of distributors to be able to help mitigate the impact of increased transitions, and more frequent shortages as demand spikes, means that a well-managed supply chain and balanced inventory proposition remains critical to any distributor’s success in 2014. While the electronics market overall has been relatively flat, there have been bright spots that should continue into 2014. Manufacturing in the Americas is showing signs of life with potential growth across the industrial segment, specifically aerospace, oil and gas (fracking in particular), factory automation and medical handheld and portable devices are all likely to perform better than the overall market in 2014. A distributor with a broad product proposition, balanced inventory and the latest technology offering from both leading global suppliers and niche innovators will be uniquely positioned for success in the New Year.
How do you manage an online community of over 200,000 design engineers, when distributors have found each customer has a distinct purchasing preference?
Halliday: The element14 Community is perfectly suited for the diversity of the engineering community across the globe. Engineers from any country, market, or company can enter and navigate through the Community in the way that is most relevant for them. Whether that means starting with markets like Industrial Automation and Energy, applications like energy harvesting or motor control, technologies like embedded semiconductors or industry legislation issues, engineers of every stripe can engage in dialogue with educators, peers or supplier experts to discuss ideas, opportunities and challenges. Once they have arrived at a buying decision, Newark element14 makes it simple for the engineers by offering a multitude of ways to buy what they need to complete their design; online, via phone to our regional Sales Centers or with a sales person in their local market.
Customers are increasingly looking for a distributor to be a partner from design and pre-production, to maintenance and end-of-life. How are you meeting those demands in the New Year?
Halliday: Supporting a customer across the breadth of their technology needs for the full duration of the product lifecycle is at the core of what Newark element14 does as a high service distributor. The ability to work with customers to source the more than 3 million products and services they need from more than 500 supplier partners globally means that engineers, technicians and procurement professionals alike only need to use one distribution partner to meet all their needs. That simplifies their supply chain and reduces the amount of time and cost required to get their jobs done. Newark element14 is able to walk alongside customers throughout that process: whether they are beginning the design cycle by buying a development tool, loading CadSoft software and designing a control board, testing that control board, integrating the control board onto an IP-rated enclosure with power, relays and custom cables or replacing the push button switches on the front panel.
What supplier trends are you seeing for 2014?
Halliday: There are three trends I am seeing with suppliers in 2014. First, there is an ongoing and increasing pace of new products being introduced, particularly in the hostile environment, energy efficiency, wireless and miniaturization spaces. Second, suppliers are becoming increasingly engaged with distribution partners. With the aforementioned swings in demand from customers, suppliers are increasingly relying on distribution partners not only to help smooth out the peaks and valleys, but also to be a true extension of their customer service experience. Finally, suppliers are becoming laser focused on penetrating new regional markets. I have seen growing requests for engagement with our local resources in Mexico, Brazil, Eastern Europe, India and China to expand their customer base. Expansion in these markets means adaptation of products for market-specific applications.
Many distributors are still focused on quickly getting new products to the shelf as a competitive differentiator. How is your approach different and why?
Halliday: New products are a critical part of why our customers value the high service distributor. What distinguishes us is that we look to provide our customers and suppliers with intelligence in advance of a new product launch. Leveraging our Community and other platforms, we have the ability to not only get new products into the hands of customers for an independent online review, but also to use social listening in order to detect trends in challenges that engineers are facing. We leverage that intelligence as we work with supplier partners to identify new opportunities for technology design and enhancement. This was one of the ways that products like 3D printers were introduced into our offering. As comments, questions and challenges about rapidly bringing prototypes to market began to rise on the Community, we partnered with leading 3D printer manufacturers to put solutions into the hands of our customers and Community members. Being on pace with these trends means that customers can rely on us to get them what they need, and suppliers can rely on us to help inform their new product development.
How does Newark element14 manage brands across margins when many distributors focus only on the top-technologies that constitute a small portion of their business?
Halliday: Customers value the high service distribution model Newark element14 practices precisely because we balance our top global suppliers that are pervasive in today’s designs with the niche companies that are innovating at the edge of what’s possible. As a result, we have a commitment to providing the full range of suppliers to our diverse customer base and ensuring that the widest offering of technology reaches those forward-looking engineers. The breadth of our proposition is an asset. We have a balanced mix of semiconductors, passives, electromechanical products, customized panel instrumentation, connectors, test equipment, tools and production supplies that makes our model work and our customers coming back. The majority of our customers buy across brands and technologies which allows us to continue to offer the expansive range and depth of technology.
To learn more about Newark element14, visit www.newark.com.