Interview with Dave Doherty, Digi-Key
»2019 will be a very strong year«
What will next year bring for the electronics industry and what are the challenges that await distributors? Markt&Technik spoke with Dave Doherty, President of Digi-Key.
Markt&Technik: The year 2018 is nearly over. How was the year for Digi-Key worldwide, in Europe and especially in Germany?
Dave Doherty: 2018 looks like it will be another record year for Digi-Key. We’ve already surpassed last year’s total of $2.3 billion and we’re projected to end our year at $3.2 billion in sales. We’re currently up 40+% globally, 50+% in Europe, and a remarkable 60+% in Germany.
Digi-Key has a 46-year history of driving above industry organic growth. What do you think about mergers&akquisitions? Will they play a role in your future strategy?
I believe you will continue to see aggressive M&A activity for both suppliers and distributors, particularly for public companies unable to satisfy the stock market’s pressure for growth solely with their own organic growth. We’ve been fortunate to have a 46-year history of driving above industry growth organically. We never say never, but the challenge with M&A considerations is always the dilution of core focus on value proposition to customers and anything that would take away from our culture of passion for delighting the engineer and purchasing professional – our core customer. We are seeing our biggest supplier partners get bigger due to M&A and a plethora of small innovative emerging technology provides fill the gap.
Our industry is still struggling with crazy delivery times. To what extent does this affect your business?
Demand has been higher than supply throughout 2017 and into 2018 in multiple product areas. At Digi-Key, our primary metric isn’t how fast we turn our inventory but rather stocking sufficient quantity to maintain a high in stock rate. Our model is well positioned to handle the forecasting many of our end customers need to get their designs and production runs to market quickly.
There is currently a discussion, especially in volume distribution, about how the distribution model can be better marketed in the future. Many services are virtually “free” for the customer. What do you think about this as a representative of online/small volume distribution?
For any design, engineers typically need components from more than one supplier. Digi-Key services the entire BOM and everything the customer needs, from a single component to entire reels. We are an NPI – new product introduction – leader for over 750 manufacturers in the entire industry, not just a single company. Because of this, we are able to market and offer the latest and greatest technologies and products, as well as the tried and true, for customers with projects in any application area.
Being a distributor with many different supplier partners also allows us to offer a vast selection of online resources featuring content from various manufacturers including a range of EDA and design tools, reference design library, on-demand multimedia library, a comprehensive article library, and community forums, among others.
What can we expect in distribution next year? And what are your expectations for Digi-Key?
In the customer base served by Digi-Key Electronics we feel 2019 will be a very strong year as the drive for innovation continues in all industry segments. We see continued global customer growth driven by a limited barrier of entry into technology development and enhancement.
The requirement for being fast and lean will continue to increase into 2019, and all aspects of running a business will be challenged with many organization moving deeper into the world of a digital business. Just as we address the world of IoT, our businesses will become more connected as we increase efficiencies. On the product side, the movement for solutions is key and we as an aggregator of technical content and products are well positioned to assist. The impact of tariffs will also remain a consideration.
Our expectations will remain the same: keep doing what we’ve been doing over the past 46 years – give our customers the speed, selection and service they have come to expect from us.
