After going from famine to feast during the 2009 to 2010 timeframe, electronics distributors adjusted to slower business conditions in 2011 and were gearing up for more normal seasonality this year. A look at some of the top electronics distributors, revealed here in our annual SourceESB Top 50 Distributors report , shows that many companies are using the adjustment time to invest in people, technology, and new business ventures that will help them capitalize on the opportunities ahead.
And distributors say the long-term outlook is bright—especially if you put the building blocks in place now to make the most of it down the road.
“We see the opportunity for electronics and lighting being substantial over the next decade,” says Lindsley Ruth, executive vice president of Future Electronics, number three on our list. “So we’re investing significantly in customer-facing resources worldwide in order to cover more customers and do a better job of developing more meaningful relationships with existing customers as well.”
Other top distributors in our survey revealed similar sentiments, pointing to new programs designed to streamline the supply chain, personnel investments designed to give them better penetration into key end markets, and new business ventures that round out their solutions-based approach to serving the growing needs of original equipment manufacturers (OEMs), contract manufacturers, and other design-engineering customers. Investment and innovation are the key routes to these destinations, and this year’s Top 50 say there’s no shortage of those elements in today’s supply chain
Building For A Better Future
Despite some rosy forecasts for 2011, the year turned out to be “just okay” for many companies, explains Ruth, pointing to supply and demand imbalances in 2010 that were followed by supply chain corrections in 2011. That left many companies with uncertain outlooks as we entered 2012. Ruth says the year is shaping up to be much better than expected at Future Electronics, however. The company is using 2011 and 2012 as rebuilding years, he adds, preparing for those long-range opportunities in components and lighting, in particular. Ruth says Future will remain focused on those core competencies, tailoring its growth strategy instead to developing a larger customer base.
“The biggest priority in our expansion program is expanding the number of customers we deal with on a daily basis,” he says. “We’re on a treasure hunt for customers around the world—the right customers in the right industries.”
For Avnet Inc., whose fiscal year ends in June, 2011 closed with two quarters of below seasonal revenue growth in its components division (Avnet Electronics Marketing). However, company leaders were optimistic about a return to normal seasonality early in 2012. Despite softening conditions, Avnet delivered a strong year-over-year performance when compared with our 2011 Top Distributors report, with overall company sales rising 16%.
Our top-ranked distributor, Avnet, has expanded through acquisition recently—in particular, adding companies to build its recently launched aftermarket services business, Avnet Integrated Resources. The division offers a “one-stop-shop” approach to customers’ need to repair, refurbish, and properly dispose of electronic products and consumer electronics. The services are geared toward OEMs, service providers, and corporations and represent another step in the company’s “total solutions” approach to serving customers’ needs throughout the supply chain.
“Our customers have come to count on us for delivering technology, services, and solutions that matter, and this is another example of our ability to use our understanding of the technology supply chain to accelerate their success,” Avnet CEO Rick Hamada said in a statement announcing the new business in April.
Avnet Integrated Resources offers onsite technical field services; board-level repair and refurbishment of electronic products; extended warranty, spares management, and repair parts programs; responsible disposition of electronic products; and responsible recycling for recovery of base material—all from locations in North and South America, Europe, and Asia. The services address growing concerns around product lifecycle management.
“For consumer products, rapid technology advancements means condensed lifecycles,” Steve Church, president of Avnet Integrated Resources, said in launching the new business. “Because consumers are replacing smart phones, tablets, and other devices more frequently, businesses and consumers continually face the challenge of deciding when to upgrade and what to do with outdated equipment. Managing these changes has created a tremendous market opportunity for refurbished products and extended lifecycle support. Fueled by public environmental awareness, consumers and industry are more conscious of making these changes responsibly and increasingly participate in product trade-in and recycling.”
Arrow Electronics, number two on our list, is expanding its aftermarket services business as well. As of mid-April, the distributor had acquired two asset recovery firms this year—Minnesota-based Asset Recovery Corp. and Texas-based TechTurn Ltd. Both companies specialize in electronic asset disposition services. Asset Recovery provides data removal, data security, refurbishment, and remarketing of electronic assets to customers in retail, manufacturing, healthcare, finance, and transportation. TechTurn processes and sells technology devices that are returned or recycled from businesses and consumers. Both acquisitions expand Arrow’s growing services business and add key customers in North America.
Arrow closed 2011 on a high note, increasing sales by 14% compared to 2010. That includes Arrow’s acquisition of distributor Nu Horizons, finalized in January 2011. Nu Horizons ranked eighth in our 2011 Top Distributors report, with sales of more than $700 million.
Supply Chain Challenges
Other top distributors are addressing supply chain challenges with technology and people. Mouser Electronics, number eight on our list, recently made news with the launch of its intelligent bill of materials (BOM) management tool, an online resource that allows customers to create a BOM on the Mouser site that can be seamlessly integrated to their own, customized spreadsheet format.
Geared toward both engineers and buyers, the tool allows customers to choose the data they want in their spreadsheet and then export it, keeping their own custom formatting intact. The program remembers currency, formatting, Restrictions on Hazardous Substances (RoHS) options, and other preferences, allowing users to create a personalized experience and speed their processing the next time around. Ultimately, customers spend less time reformatting data and resetting preferences and more time getting their design and procurement work done.
“Our whole goal was to create an intelligent BOM” that creates value for the buyer/engineer, said Kevin Hess, Mouser’s vice president of technical marketing, in an interview following the launch of the tool this February.
Future Electronics is also focused on supply chain issues, though from a less technical perspective. Ruth said the distributor has a renewed focus on educating customers about supply chain issues, especially in light of last year’s natural disasters and their effect on the electronics supply chain.
“The supply chain disruptions related to the Thai floods and the situation related to [Japan’s] earthquake and tsunami really highlighted the need for customers to have a better understanding of the complexities of the supply chain,” Ruth said. “So we’re focused on providing a greater level of information about the supply chain.”
The main route to providing that information: Future’s people.
“In the last 12 to 18 months, we’ve discovered this really cool device called a phone,” says Ruth, pointing to the ambiguity that often arises from conducting business primarily online, over e-mail. “In all seriousness, we are talking more and more with customers and we’re measuring that talk time. We want as many people talking to the customer as possible.”
That involves more emphasis on technologies such as video conferencing and a renewed commitment to employee training and retraining on company programs and capabilities, Ruth says.
In the end, it all adds up to service. Finding the right solutions to meet customers’ needs remains at the top of every distributor’s 2012 to-do list.
“With our customers and our suppliers, we want to understand their needs and address their needs,” says Ruth. “It’s that simple.”
The Methodology Behind Our Survey
The Source ESB staff and Penton Media’s research department began our 2012 Top 50 Distributors survey in February, contacting more than 500 North American electronics distributor locations via e-mail. Throughout February and March, the staff narrowed the online submission forms to 100, ranking each company based on total sales volume and ensuring that each had a major presence in the North American electronic components distribution market. From there, the list was narrowed to 50 top firms.
Each company in the list is ranked according to its total global sales volume, and all figures are reported in U.S. dollars. We used self-reported data from each company and verified the information against annual reports and earnings statements, where possible, as well as in follow-up interviews with some of the companies at the top of the list. Yet there’s more than meets the eye with some of the companies at the top of our list.
Figures for Avnet Inc., ranked at number one, and Arrow Electronics, ranked number two, include the companies’ sale of computer products. Avnet’s company-provided figures are for calendar-year 2011. (The company operates on a fiscal year that ends in June.) Arrow’s listing reflects its public year-end close. It includes the acquisition of Nu Horizons, finalized in January 2011. Nu Horizons ranked eighth in our 2011 Top Distributors report.
Sales listed for privately held Future Electronics, number three, are based on Source ESB estimates. Sales for number four, Premier Farnell, reflect the British company’s total worldwide sales, including its North American business, Newark element14.
Figures for Electrocomponents plc/Allied Electronics, number seven, represent a company-provided estimate for global sales. Sales for Allied, the company’s North American business, were roughly $440 million in 2011.
There were also a few changes to our list this year. In addition to the loss of Nu Horizons, RS Electronics, number 20, will disappear from our list next year. The company was acquired by Wesco International in January and is now a division of Wesco’s Carlton-Bates, which came in at number 12. In other Top 10 news, TTI Inc., coming in at number six, has set the stage for growth in next year’s report following its acquisition of privately held Sager Electronics, announced earlier this year. And new to our top 10 this year is N.F. Smith & Associates, coming in at number 10. Smith is a Texas-based independent distributor serving original equipment manufacturers and related service providers.
Our goal is to provide a comprehensive list of the largest electronic components distributors doing business in North America. We will begin compiling information for next year’s report early in 2013, so look for our nomination form online and submit your company for consideration.
We welcome your input as we develop next year’s report. Send your questions or comments to sourceESBeditor@penton.com.
The Top 50 Electronics Distributors 2012: