Many changes, one constant
DigiKey drives digital transformation
One look at the new highly automated distribution center immediately shows how much has changed at DigiKey. But not all major transformations are visible to the naked eye.
Endless rows of conveyor belts winding over several floors, towering shelving and a control room reminiscent of a NASA Mission Control Center: the extension to DigiKey's headquarters in Thief River Falls (Minnesota, USA), called the "Product Distribution Center expansion" (PDCe), impresses not only by its sheer size - the Empire State Building would fit inside crosswise - but above all by its highly complex inner workings.
In order to automate the goods distribution process to a greater extent, the distributor has invested an enormous amount of technical effort in recent years. At so-called "Pick and Pack Combo" stations, for example, two previously separate work steps have been combined to save time and resources. A separate automatic machine has also been developed for the technically demanding cutting of a customer-specific quantity of components on continuous tape (cut tape).
And even the garbage is taken care of by an autonomous robot that also plays music during its rounds. But before the entire logistics machinery achieved the reliability required for smooth operation, the development team had to overcome numerous teething problems most of the time. "It was as if we were relearning how to walk," says Chris Lauer, Vice President Order Fulfillment, describing the arduous process.
In the old building, on the other hand, not much has changed at first glance: at the entrance, a sign still greets visitors with the - for Europeans unusual - notice that no guns are allowed on the premises. The old-fashioned grandfather clock also still stands in its corner, but there is now a modern co-working area in addition to the typical cubicals of an American open-plan office. But in fact, much more has changed at DigiKey than can be seen with the naked eye - as is the case when touring the impressive new building.
"DigiKey helps companies find new solutions for a better world." That's how DigiKey's President Dave Doherty sums up the new mission statement. Externally, this message is communicated via an updated, graphically reduced logo and the associated claim "We get technical." After all, it is not simply a matter of supplying customers with goods, but rather of actively supporting them in solving their problems. "We don't want to be seen as a catalog provider, but as a technology company," adds Tim Carroll, Global Head of Marketing and E-Commerce.
According to Doherty, this means that customers can still call DigiKey at any time if they need support. But the goal is that there will be fewer and fewer occasions for them to do so, because they will be provided with all the information they need right away. To achieve this, Doherty and Carroll are relying on consistent digitization - both in customer communication and in logistics processes. DigiKey is already working with AI tools, for example in determining specific customer prices for large customers. In the future, the website will also be more personalizable, for example by creating individual filter profiles. DigiKey is well on the way to achieving this, as evidenced by its regularly calculated Net Promoter Score, which measures customer satisfaction on a scale of 1 to 100. With a score of 68.8, the company performs better than Netflix, Apple or Amazon.
DigiKey also collects informative measurements on the fundamental market situation. For example, the so-called design index, which refers to orders specifically for development projects, has been above the normal procurement index since mid-2022. Accordingly, the average order size has also decreased since that time. "Where in previous years customers were primarily concerned with getting enough components to fill their orders, this year has seen a significant increase in development activity," explains Mike Slater, Vice President, Global Business Development. While the usual market fluctuations are also reflected accordingly in DigiKey's sales figures, the number of customers, on the other hand, is rising continuously - year after year.
The EMEA region in particular is responsible for DigiKey's growth. In this region, Linda Johnson, Executive Vice President Operations, sees good development opportunities because "many potential customers don't even know us yet". To leverage this potential, it is particularly important that DigiKey is perceived as a local offering, i.e. that the language and currency are adapted to the respective country. The expansion of another DigiKey offering is also aimed specifically at Europe. Direct deliveries from European suppliers to European customers are now possible via the Marketplace program. Without the detour via the USA, there are advantages in terms of delivery time and sustainability. In addition, more product types can be sold this way, including lithium batteries, heavy automation equipment, chemicals or solar products, according to Missy Hall, vice president of new market development.
Despite all these changes, there is one constant at DigiKey that continues to be seen as a key success factor: the special spirit of the far northern U.S. location, which includes not only exceptional team cohesion, but also a very creative inventive spirit. Or as Doherty puts it, "It's the team that makes the difference."
