The changing face of the distribution market
04 August 2017
The supply chain for electronics components faces many challenges. Consolidation continues to reduce choice for buyers. High demand from automotive puts inventories under pressure, limiting availability for industrial markets. This article from Anglia, the UK’s largest privately owned authorised distributor of electronic components, discusses interesting times for our industry.
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Despite these challenges, the UK electronics industry the ecsn (Electronic Components Supply Network) show that electronic components sales in the UK grew by 24% year-over-year in May 2017. It indicates that the UK market is in good health, with SMEs taking full advantage of the low value of the pound to boost their export sales. We find ourselves in somewhat of a ‘perfect storm’: with growing demand meeting limitations in supply chain. Distributors need to streamline their operations to help customers overcome these limitations, as well as support the increased demand they are seeing.
Too often, suppliers are tempted to do the opposite: streamlining their operations at the expense of the supply chain. For example, many regional and global distributors have replaced UK warehouses with central European warehouses. Although most still offer same day shipment, delivery can take longer, making the cut-off time for a next day delivery earlier and the arrival of the shipment later in the day. Airfreight can also be less reliable, as it is more weather-dependent than overland delivery. UK warehousing remains an important benefit to UK customers demanding swift and reliable service.
To ensure the market continues to grow, we believe it’s the responsibility of distributors to invest in the UK’s vibrant small to medium-sized electronics manufacturers and source a flexible, instantly accessible inventory of commodity components on an invoice-at-usage basis, thus helping the customers to grow. On some occasions, customers need instant accessibility and want stock of their regularly used components on-site, but many entrepreneurial businesses lack the inventory management experience, relying on the distributor to manage this stock to avoid costly excess or expensive line stops due to shortages.
A web-based system can provide a solution where component usage is tracked in real time, making manual usage reports and spreadsheets a thing of the past. With a real time, web-based system, consumption can be tracked, and replenishment adjusted in accordance with changing demand patterns. Distributors and customers can work together to establish a formula for replenishment and agree daily, weekly or monthly shipment cycles, with consolidated invoicing to suit both parties.
The booking in of shipments should also be automated to ensure quick and simple replenishments; hand-held scanners can be issued to minimise the risk of errors.
At Anglia, we have pioneered two initiatives that have really supported our small and medium-sized customers: Anglia Sigma and Anglia 80/20. The former is a comprehensive, free dashboard that provides analysis of forward, current and historical orders and enquiries, as well as a vendor rating feature that shows Anglia’s delivery performance. Our aim with Anglia Sigma is to give customers complete transparency in their trading relationship with us. We believe we are the first and only electronics distributor to offer this level of information absolutely free-of-charge to all our customers, through an instantly accessible online portal.
Anglia 80/20 offers a new level of flexibility in the supply chain, which was previously only available to large volume users through consignment/Vendor Managed Inventory (VMI). There is no start-up cost. Customers receive an agreed level of inventory of their regularly used commodity components that are held at their site, providing instant accessibility. The level of inventory is scaled according to the customer’s forecast demand and is only invoiced as it is used.
It’s an exciting time to be part of the UK electronic components industry, with both challenges and opportunities to overcome. Through solid business relationships, easy-to-manage stock control and a hunger to succeed, the best players will continue to thrive in this growing market. The key factor in distribution still remains the relationship with the customer and having the technical knowledge to help with design-in support – as well as managing stock inventory in a transparent, real-time way.
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