Interview with Dave Doherty, Digi-Key

»M&A considerations would dilute our core value proposition«

12. April 2018, 14:12 Uhr | Gerhard Stelzer
Dave Doherty, President and COO of Digi-Key in his office in Thief River Falls/MN.
Dave Doherty, President and COO of Digi-Key: »We’ll continue to head in the direction the customers take us.«
© G. Stelzer / Elektronik

Dave Doherty, President and COO of Digi-Key, answers questions about the business strategy, the result for 2017 and what he thinks of acquisitions.

Digi-Key is well known for the breadth of the product portfolio in terms of components. Which role do modules and boards play?
Dave Doherty: Models play a key role and we’ve grown the numbers of suppliers we engage with that provide modules as well as increased the offerings from existing suppliers. Mo­dules are part of a movement in which customers are looking for »solutions« in addition to discrete devices. Development boards, starter kits, reference designs are all examples in which some customers utilize the boards to accelerate their proof of concept while others go directly into low volume production with their unique software or peripherals wrapped around these boards.

The internet of things (IoT) will be one of the strongest drivers in the electronics industry. How does Digi-Key address this potential?
Doherty: Our response may sound redundant but we respond to this need by searching out more new suppliers and more offerings from our existing suppliers. We offer solutions from more than 200 leading suppliers – 20 new suppliers added in 2017 – with over 36.000 relevant sensors, processors and connectivity devices offered.

In recent years, Digi-Key has evolved from a logistics driven distributor to a company which is more and more focused on
delivering support to the engineering community. What is
the current status, and what are the next steps in this regard?

Doherty: We’ll continue to head in the direction the customers take us. Today we offer 24/7 tech support via phone, email and live web chat. We’ve added more content available on our website; both DK original content as well as playing the role of curator to normalize the search and findability of supplier sourced content.

The year 2017 is completed. How was 2017 for Digi-Key on a worldwide basis, in America, in Europe and especially in Germany?
Doherty: Digi-Key will grow by more than 26% globally with Germany driving Europe’s overall results at 38%. We closed in Europe with year over year growth at 46%. Having product in stock, available for immediate delivery is still a differentiator for us.

What do you expect from 2018 and which new developments could your customers expect from Digi-Key?
Doherty: As an industry we are terrible at forecasting. Conventional wisdom is that supply of product will remain tight through the first half with some return to normal lead times in the second half. You will continue to see Digi-Key inventory product aggressively and continue to offer new products and solutions more quickly than anyone else.

Recently the distribution faced some mergers & acquisitions.
Examples are Farnell, MSC Technologies, Setron … What’s your perception of this consolidating market? Are M&A an option for Digi-Key?

Doherty: 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. We’ve been fortunate to have a 46-year history of driving above industry organic growth and believe M&A considerations would only dilute our core value proposition or distract us from our passion of delighting engineering and purchasing professionals.

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