An exclusive look at the inner workings of Digi-Key Electronics
03 December 2018
Back in June, Paige West, Editor of EPDT sister titles, DPA (Design, Products & Applications) & Connectivity, visited the HQ of electronic components distributor Digi-Key Electronics. In this article, first published in DPA’s August issue, she recounts her trip...
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Three flights totalling over 10 hours, plus an hour’s car ride later, I arrived! But this can’t be right, can it? There’s hardly any cars, houses or people. Where’s the bustling city? Where’s the busy crowds? Where’s the huge airport you expect one of the fastest growing global electronics distributors to use?
Well, in fact, only a grand total of around 8,000 people live in Thief River Falls. So how does this large corporation operate out of such a small American town? And how has it survived in the same place since 1972?
To answer these questions, I took a tour of Digi-Key’s 700,000ft2 distribution centre with Mark Schmitke, Community Relations & Events Manager: All aboard for the Digi-Key tour!
It was Dr. Ronald A. Stordahl’s interest in ham radio that led to the start of Digi-Key. He started off assembling and selling the ‘Digi-Keyer’: a digital electronic keyer kit for sending radiotelegraph code for ham radio operators. The Digi-Keyer was discontinued, but he began selling electronic components in 1972, sowing the seeds for what became one of the fastest growing electronics distributors in the world: Digi-Key Electronics.
One of the first advertisements Stordahl ran in a newspaper advertised 36 parts. Now, over 40 years later, Digi-Key stocks 1.4 million parts and offers over 8.1 million online, representing incredible growth.
With so many parts in stock, I was keen to find out exactly what went on behind the scenes after customers place an order. Digi-Key is one of the few global electronics distributors without multiple warehouses across the world.
This single distribution centre, in Thief River Falls, means the company doesn’t have to compromise on the breadth of product. It also allows Digi-Key to ship 99% of all orders the same day they are placed. But how?
Picking & Packing
As soon as you place an order, either on the website or over the phone, a unique label is printed, containing letters and numbers that detail each part. This makes its way onto a container that travels on a cross belt system through the Picking & Packing area, the first line in the process. Over 1,400 people work here, many of them performing two main functions: picking and packing.
Green arms over the conveyers scan the labels to determine which packaging station they need to go to. Workers then scan the label, collect the parts (while triple verifying everything is correct), then bag it up and send it over to shipping. This process takes place across the entire floor of the distribution centre. Each order can be picked, packaged and shipped in as little as 20 minutes, depending on the size.
Next, is the shipping area: a hub of red lights and sorting tunnels. A sophisticated scanner in the tunnel reads the box coming in from the packaging area and determines the shipping method, while also automatically notifying the customer that their package is being shipped. From here, UPS or FedEx pick up and process the orders.
Thief River Falls has staff from UPS, FedEx and DHL working on-site and processing the products once each box leaves the Picking & Packing area. There are nine cargo flights that leave the airport each day: UPS have two flights that go direct to Louisville, its main hub; and FedEx have a direct flight to their main hub in Memphis.
This system is replicated on the other side of the building. Sounds simple right? But that’s not the half of it. The distribution centre may be the brains behind the brand, but people are at the heart of it: it’s the people who make the company what it is today. At the Thief River Falls facility, there are around 3,500 employees – and globally, it’s over 3,800. I took a wander through the rest of the facility to see what Digi-Key employees got up to on a day-to-day basis.
These guys do much more than just purchasing parts! They make sure that all parts are available in stock for customers, so if they call and make an order, it can get shipped out immediately. They also expedite lead times to make sure parts from suppliers are arriving to schedule. Every now and then there are unique situations, normally weather-based, which could affect things, but the purchasing team prepare for all eventualities.
History charts from the 90s show that most orders came via the phone. Today the majority come via the web or email. Industry rates Digi-Key’s website very highly, and this needs to be maintained constantly. Enter the Marketing Department: this team focuses on renewing and updating the website to ensure it’s easy to navigate and effortless to place an order.
This team works on unassigned sales with customers around the clock. They not only assist customers in the US: there are offices in Korea, Japan, Shanghai, Hong Kong, Munich, the Netherlands and Israel – so teams will work 24/7 to help customers from these countries, too.
Digi-Key has a great policy: if a customer rings into the office they’re talking to someone within five seconds. There’s no automated voice and there’s no lengthy hold times: you’re actually talking to a person within five seconds! This policy is regularly achieved.
Customer Service Department
Digi-Key has been rated with top quality customer service for a number of years. People buy components confidently as they know they will be looked after if any issues arise. This department specifically deals with any issues or questions from customers – including those about quantity, quality and delivery times. Being in a part of the US that suffers from snowstorms and hurricanes means that sometimes UPS or FedEx can’t leave on time, leading to delayed deliveries.
This doesn’t happen very often, but when it does, the Customer Service Department keeps the customer updated every step of the way.
Applications engineers and technicians are the gurus of Digi-Key. Not every employee has an electronics background, so if one of the sales team are on the phone to a customer and they want more technical information, AEs can be brought in to answer all questions.
The product managers are also situated in this area, working with suppliers, either looking for new ones, working with existing ones or communicating with suppliers that approach the company. From time to time, different suppliers will bring training programmes into the office for engineers and product managers to keep up to date.
For those employees without an electronics education, they have an option to take a course at the ‘Digi-Key University’. This takes place over three semesters, with one class per semester, involving a basic introductory course into electronics. After this, there’s the option to progress onto a second programme, running over two years – after which time, students will graduate with a degree and the opportunity to become a technician in a particular field.
Digi-Key will pay up to half of all tuition, offering students the opportunity to work whilst they study – and guarantee a job at the end.
Yes, that’s right – the Auditorium! This space is used for a number of different events: here, Dave Doherty, Digi-Key President will conduct his regular ‘State of Digi-Key’ address; training for product managers is performed in little breakout pods; and employee holiday meals are enjoyed.
The Digi-Key Auditorium even hosts community events: there is an open house for up to 500 community members, involving coffee and cookies; plus, the Digi-Key choir regularly makes an appearance – and three times a year, there’s a blood drive.
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