Everything new in the channel? The supply chain goes “democratic” and its challenges

Hermann Reiter, Digi-Key: »The biggest strategic partner of many of our customers is Apple and the internet.«

Maker culture, new markets, requirements in and around the IoT change customer demands and the supply chain, and pose challenges for sales channels. How do electronics distributors react to that? The Official Daily spoke to volume and online distributors.

“It’s our job to solve customers’ various problems”, outlines Ralph Bühler, senior vice president of Farnell. And those could be extremely diverse: hundreds of thousands of customers worldwide with millions of different demands. “We can’t reduce distribution to a demand and create situation. We have much other value added that we apparently don’t sell the customer.” Distribution was a bank and logistics service provider for instance — and that in most cases entirely free of charge. Which made it difficult to get the customer to pay for one or the other service in times of tight availability.

There might always be the argument, say the distributors, ‘the other one does it cheaper’, but if the conditions are right the price is not the sole criterion by which customers judge their distributors. Personal contact is much more important, emphasizes Markus Zühlke, sales manager for Germany at Rutronik: “In our customer surveys that’s the major point.” At any rate, you cannot expect to hear an automated call center at Rutronik asking ‘Please enter the eight digits of your customer number’, stresses Zühlke.

Joachim Kaiser agrees on that, manager of sales and supply chain solutions at Glyn. “I still visit customers personally; and even if there are three cellphones in front of them on the desk, they’re ready to speak to me. What I recommend, ask the customer what they’d like to have.” So the customer and their requirements have not basically changed much over the years — or have they? On the one hand customers want more direct contact, on the other hand you see a boom in online distributors like Mouser, Farnell and Digi-Key, who increasingly generate their turnover through the internet. In any case online distribution demonstrates that a model works where supply chain service is rewarded through the unit price.

Now, what does that mean for the future orientation of distribution? “As long as customers see value added in us we have a right to be there”, reckons Marie-Pierre Ducharme, director of supplier marketing & business development EMEA at Mouser Electronics.

“We must grow to be distributors and learn to sell our services, make it clear to the customer that they’re not getting everything for free”, adds Uwe Reinicke, regional VP sales CE of TTI. “Online distributors show that it can work: earlier nobody thought that customers would pay for samples. Today it’s quite normal that engineering draws its sample needs through an online distributor.”

But this business is not sure-fire either. You must always work on the matching content and provide the appropriate input to stay right on top in a customer’s appreciation as a component supplier, reckons Hermann Reiter, director of sales central and eastern Europe and managing director of German Digi-Key: “Because the biggest strategic partner of many of our customers is Apple and the internet.”

Maker culture and renaissance of the soldering iron

Online distributors also showed they had a good nose in exploiting the maker and education target group. Stefan Fuchs, VP of Conrad business supplies, finds that the education sector is developing extremely well, as shown by the increasing number of orders from makers and young engineers, actively involved in electronics and its development. “Five years ago young people were no longer interested in soldering processes. Today at shows for makers we find that young people are eager for knowledge and are keen to find out how a soldering iron works.”

Ducharme too can see this development: “Young engineers are a very interesting new target group for us too. Added to that, the broad selection of development kits and design aids makes a start in electronics easier, enables a broader segment to become makers.” Where the markets are concerned, there is scarcely a sharp dividing line between different segments, reckons Ducharme: “When we talk about the IoT we mean just about all other markets.”