Electronic Component Distributors Need to Add Value to Succeed

Electronic technologies constantly change the global economy and at the core of this transformation is the electronic component industry. This evolution is forcing a paradigm shift in the way electronic component distributors must do business, now and in the years to come, if they want to succeed.

Some, but not all, distributors have already adapted to this change by providing more than just a product. They have shifted from strictly distribution of components and connectors to include value-added services, such as just-in-time (JIT), custom design capabilities, assembly and kitting, as well as engineering services.

Benefits of OEMs

Offering value-added services provides several benefits to original equipment manufacturers (OEMs) and their designers/engineers. OEMs are not always knowledgeable about the products available to them or aware of the latest component technology. There was a time when manufacturer’s representatives were the conduit through which customers were educated on the manufacturers’ product offerings. Today, manufacturers are dramatically reducing their outside sales forces, and so the task of educating the OEM is now the responsibility of the distributor. This places the onus directly on the distributor to be an expert in what they sell or face the consequences of lost opportunities.

This shift benefits the OEM because a manufacturer does not look beyond its own product line when assisting the designer/engineer with part design. A distributor with a wide range of products and product knowledge is able to offer the OEM viable alternatives they may not have known existed.

When designing an entire system, the designer/engineer is confronted with several challenges throughout the development of the project and may overlook issues that are crucial to the success of the design. Because the distributor services a variety of customers from various industries, it is exposed to diverse applications utilizing many different design concepts. The distributor is able to use this expertise to offer suggestions and alternative solutions to the OEM services, possibly avoiding costly design mistakes.

Consultative Selling

Today’s distributor needs to utilize consultative selling. It needs to have the knowledge to assist the designer/engineer when troubleshooting problems such as inter-connectivity issues or environmental concerns. Will it be exposed to gases, liquids, pressure or even salt spray? What about the size, shape and configuration of the unit? Design panels do not always allow for adequate space or unusual locations. What about mating? The distributor can offer alternative mating solutions so the OEM is not forced to rely on one manufacturer. The distributor must be knowledgeable enough to evaluate the environment, size restrictions or obsolescence of the components being designed in, and then inform the designer/engineer of any possible issues while offering viable solutions.

Another change taking place at the distributor level is product customizations. For applications where standard products or solutions are not always available or a manufacturer is not willing to work with the OEM on a new design, today’s value-added distributor is able to offer customization services such as plating, custom cable assemblies and custom pin configurations. Not all distributors have this capability, but those that do add significant value to their relationships with their customers. In return, this creates loyalty, and it is loyalty that keeps the customer coming back.

Sales through distribution will continue to increase over the next few years. A large part of this is because OEM’s have started to depend on theirs relationships with distributors much more so than its relationship with the component manufacturer. OEM’s depend on the distributor for their product expertise, as well as, design because redesign today simply costs too much time and money. A correct solution must be found quickly and on the first go-round.

The electronics industry is constantly evolving, and value-added distributors have their fingers on the pulse of new trends and technologies. They are in tune to these changing trends and usually have the resources to implement, and at times, perfect the idea. There are notable examples when a distributor has been responsible for an industry design that is now commonplace.

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